October 18, 2015

5 Market Pressures Driving a Need for Greater Resilience in Manufacturing Operations

Here five market pressures driving manufacturers to improve operational agility.
Avatar Polina Ivannikova

IDC Manufacturing Insights recently completed market research focused on executive decision making at manufacturing organizations. Pressure for more rapid product introductions, faster adaptation to local market conditions, and a continuous need to optimize costs, quality, and efficiency have made the management challenges for today’s global manufacturers quite daunting.

One of the recommendations from the report was the need to build resilience into production or manufacturing capabilities by investing in more consistent performance measurements, greater visibility into current status, and analytics to provide retrospective, perspective, and predictive capabilities to operational management. The ability to respond quickly to change is still of paramount importance, hence the need of resilience in manufacturing.

According to the research, most companies have not made the requisite organizational, process, and technology investments to support the appropriate approach to optimizing factory capabilities. Too often, plants remain islands unto themselves with independent management and no corporate wide coordination. Often, plant management has been allowed to make independent decisions about the technology in use, leading to a lack of consistency in manufacturing processes. At the executive level, companies have failed to establish common reporting for plant performance. The primary barrier to more effective management is usually a lack of common metrics and visibility into ongoing activity.

Operations executives, as shown in the survey results, understand that production capabilities are critical to responsiveness. Here are the top five market pressures that are driving the need for greater resilience in manufacturing:

  1. Faster time to market and volume. Making the transition from approved design to volume production may be the single most determining factor in achieving profitable growth. Not just the domain of high-tech manufacturing, a company’s ability to make important decisions based on production efficiency and first pass quality can impact market share and long-term profitability.
  2. Tailored products for specific markets. While there is a general movement toward creating global product platforms, there remains a need to adapt those products to local market requirements. A critical factor in being able to respond to these needs is the capability for supply in proximity to that market to be able to shift product mixes and manufacturing approaches. Visibility into the demand signal is only half the equation; operations executives need to be able to gain perspective on production status and make near-real-time decisions about production sequences.
  3. The quality imperative. Production quality is a differentiator, but often it is less about having a superior product and more about avoiding adverse events. Visibility into very granular quality data at the plant is critical to establishing an early warning capability and a higher level of responsiveness to quality leaks.
  4. The productivity vise. Operations executives have been quite successful in implementing continuous improvement programs to drive high levels of productivity. The unintended consequence is that higher productivity means more factory capacity, which translates to more aggressive pricing, raising the bar for even higher levels of productivity to sustain profitability. This “productivity vise” is further exacerbated by volatile raw material costs that must also be offset by higher productivity. Operations executives must gain visibility into metrics that will help them set the right priorities for continuous improvement efforts.
  5. Regulatory compliance. A global factory footprint also means a difficult regulatory environment. Environmental, health, and safety monitoring is no longer being left to the individual plant management — a network wide view is needed.

My next post will examine what steps can be taken to address these objectives to improve operational responsiveness, resulting in greater efficiency, agility and resilience in manufacturing operations..

Gordon can be found on Google+.

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