ManufacturingAugust 23, 2019

Top 3 Challenges That Can Break Manufacturers

A packaging label that reads, “Caution: Handle with Care,” typically is designed…
Avatar Shashank Nanivadekar

A packaging label that reads, “Caution: Handle with Care,” typically is designed as a warning to let handlers know that the items contained within are fragile and could break if handled without care. Glassware is fragile to falls, so it must be handled with care. But fragility doesn’t just apply to glass. It also applies to businesses.

Fragility, Nassim Taleb elaborates in his book called, Antifragile – Things That Gain from Disorder, doesn’t just include glassware, but also systems, markets, companies, and above all, people. Manufacturers and product developers are exceptionally fragile to market conditions, globalization, flattening of the supply chain, competition, and labor economics. Conclusively, a company can break from literally any direction.

Taleb argues that for companies to avoid being fragile, they must focus not just on their ability to survive catastrophes, but to gain and improve because of them. To take our analogy further, if a piece of glassware got stronger when you dropped it, it’s not fragile: It’s now antifragile. For companies to thrive with massive gains through adverse market conditions, they must become antifragile…or they may not survive.

Manufacturers rely on processes, systems, standards, and best practices. These standards and practices get revised each time the company encounters a problem that existing systems can’t fully address. However, companies need to change this mindset of becoming robust to new problems. Instead, leadership needs to think long-term all the time in order to become antifragile to rare and extreme challenges.

There are three realities that every manufacturer faces. To be antifragile, businesses must understand each of them and find a way to increase gains when they face these challenges.

  1. Technical Debt is simply any extra work that needs to be done as a result of choosing easier solutions, tricks, and paths. Basically, it’s the cost of doing patch-work instead of fixing the root-causes. Reworks, errors, production choices, scheduling choices, re-prioritization, bad communication. Some of the simplest decisions in manufacturing can accrue technical debt because of the way companies structure change processes, making decisions about production, scheduling, planning and inventory. To avoid technical debt, simplify your processes to the point that any inefficiency screams out at you.
  1. Extremely Low Demand can seriously stress out the business at a financial level. Any number of factors can cause manufacturers to maintain their business by categorically reducing cost and overspend. However, most companies reduce cost by laying off employees. Instead, they should be cutting down activities that don’t contribute to profitability.

Up to 30% of a company’s activities can be considered to add no value to the bottom line. These wastes can come from pointless waiting, over processing, manual processes and approvals, data fidelity issues, reworks, etc. Low-tides in business are ideal times to critically analyze your time-spent and see what doesn’t add value.  If you don’t fix fundamental operational misgivings, higher demand for your business won’t translate into higher marginal profits.

  1. Extremely High Demand, while seemingly a great thing, is the greatest stress test your business can face. It tests the absolute limits of efficiency for every team, and everyone needs to operate at an elite level. Extremely high demand introduces newer and unknown bottlenecks, tests the cycle-times for all the machines while also testing the quality and performance limits of every single employee in the company’s value-chain. Your performance under this kind of stress is dictated by your ability to prioritize and assess the risks and impacts of your decisions. Excel and home-grown systems undoubtedly fail at this because they are only engineered to be over-engineered at best. They don’t help communication throughout the company which is critical to do well in these conditions.

In a recent webinar, Aventec was able to show how aligning operations from design finalization all the way to a validated process plan and cycle time – while using a single model, was critical in shaving off inefficiencies. An integrated data model and life cycle management system is inherently more antifragile because it aligns all the relevant stakeholders and makes it easy to spot inefficiencies by nature.

Manufacturers whose systems are only meant for, and updated to handle day-to-day challenges will inevitably fail because they haven’t planned for the worst case or the worst outcome of the best-case scenarios. When a rare event stresses the system, it more likely than not breaks. On the other hand, an antifragile system will not just keep you up and running, it will help you reap exponentially higher gains.


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