Transforming Manufacturing Into a Competitive Advantage

Aug. 1, 2011
Industrial manufacturers have largely prevailed in recent years despite challenging times—innovating in automation, managing costs without sacrificing quality and expanding globally.

But, how should they prepare for what is expected to be one of the most demanding periods yet?

Over the next 15 years, companies will face many additional challenges, making their need to sustain cost efficiency and quality a given.  Developing manufacturing excellence will be key to competing effectively. Customer segments are proliferating with each segment seeking more tailored products and supporting services to suit their specific needs, while Internet access to product comparison information virtually anytime and anywhere is helping to fuel customer expectations for faster launches and higher quality.

Moreover, global supply chains are growing in complexity, and will require greater visibility and more robust management to ensure effective production. The need for engineering talent and raw materials will continue to grow, and increased scrutiny of sustainability levels throughout the organization and not just its products will require that organizations revisit sourcing, production and distribution resources.

Attributes for change
Accenture outlines five winning manufacturing attributes companies will need to embrace to thrive in this changing environment.

First, the shift towards highly customized products will favor manufacturers that can be flexible, mastering a dual focus which includes both traditional and modular manufacturing processes. This strategy will help companies continue to meet traditionally mass-produced product needs, while satisfying specialized demand that requires a modular approach to address the complexity involved in producing such products.

Customization also will impact supply considerations. Manufacturers are already finding that moving supply too far from demand hinders their ability to meet customer expectations for specialized products. To succeed, they will need to adopt a ‘globally local’ mindset that balances supply locations with demand locations. Then too, it will be important to design a network based on total value chain costs and customer service. This is in addition to migrating operation modular components to low-cost opportunities.

Elsewhere, many suppliers to the manufacturing process have become integral to helping companies deliver value. To advance this trend in the coming years, companies will need to adopt new manufacturing models like contract manufacturing, which, for example, has aided consumer electronics firms in their ability to contend with extremely short product lifecycles. Models and processes may vary to better serve diverse channel and customer needs. But, the overarching benefit will be the shift from fixed to variable costs, which will help manufacturers achieve needed flexibility.

The fourth attribute companies will need to develop is shop floor agility. This will include applying continuous improvement programs to whatever strategic activities and models are adopted; using reliable, efficient equipment that is highly configurable and easily transportable; and placing people with the right skills in regions where operations are expanding or being established. Leveraging predictive analytics will be critical too. Manufacturers that make effective use of analytical data will gain greater insight into customer, supply chain, product development and production needs, as well as be able to better anticipate cost, quality, productivity, or customer service issues.

Finally, increased interest in environmental and social sustainability is placing greater pressure on public companies, in particular, to provide sustainability transparency. Manufacturers will need to find innovative ways to incorporate elements of sustainability into their offerings, and make customers aware of those elements from design to disposal.

Industrial manufacturers that delay addressing the many challenges emerging around them will risk being overtaken by more nimble competitors.  Developing these five manufacturing attributes will help set a course toward transforming manufacturing operations into a competitive advantage and achieving high performance.

James Robbins, [email protected], is a senior executive with Accenture, a global management consulting, technology services and outsourcing company.

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