Industrial equipment (IE) manufacturers, having endured several difficult years during the recent economic downturn, are again experiencing robust demand in their primary customer markets. But the resurgence also is creating new challenges in terms of meeting that demand, and also a dilemma as to how best to sustain success in a business environment that could change again.
Today, because of dwindling capacity and a shortage of key skills, IE manufacturers are finding it daunting to keep pace with surging demand. As a consequence, they face the difficult decision of either investing in building new, cost-intensive facilities in the belief that current demand will be long-term or capitalizing on today’s growth opportunities by squeezing more out of their existing assets to minimize cash outlay and risk.
Accenture research, “Insights from the Accenture Global Manufacturing Study,” surveyed 250 senior manufacturing executives in large companies headquartered in North America, Europe, South America and Asia, including 49 executives representing IE manufacturers. The survey indicates that many companies are leaning toward the latter; 63 percent of responding IE executives said they plan to get more out of their current assets instead of making more capital investments. The study includes a series of insights that can help IE companies more effectively leverage their capacity and capabilities to share in the sector’s renewed prosperity, while preparing for potential market shifts that could occur in the future.
IE manufacturers considering this strategy should focus on several key areas:
Acquisitions—More can be realized from existing facilities and assets by leveraging the capability and capacity of acquisitions. One key way to do so is by deploying the modular approach to production, made famous by Toyota, which can enable companies to quickly allocate manufacturing capabilities across the facility network in response to market changes.
Automation and technologies—For years, IE manufacturers have relied on automation to improve plant output and efficiency, and eliminate capacity constraints. Today, they also have an opportunity to enhance this approach by applying emerging digital and other technology solutions to their plant operations and assets to make them more efficient and productive.
Flexibility—An increasingly volatile and unpredictable global economy will require that IE manufacturers build a more flexible operating model. Infusing greater flexibility across current manufacturing networks can make it easier to align supply with demand. New technologies like the Cloud and the potential use of 3D printing also should be considered to improve manufacturing flexibility.
Operational excellence—Surging demand is placing greater pressure on companies to keep their cost-per-unit steady. Maintaining or improving profitability is key to addressing this challenge. Assembling operational excellence teams focused solely on eliminating or minimizing manufacturing process constraints, increasing production efficiency, and generating the largest bottom-line returns based on specific profitability and value targets will help stabilize costs. Moreover, these actions can help ensure that increased capacity is profitable.
Skills—Critical skills are in short supply. Exacerbating this challenge is the growing use of automation and technology across manufacturing operations that will require skills with far greater technological proficiency. Companies can address this issue by compiling detailed data on employee skill sets to determine the attitudes, interests and competencies of each employee. Use the information to form an internal skills-matching system that will help move capabilities more swiftly to where they are needed.
Visibility—IE manufacturers can further enhance their ability to meet changing demand by improving visibility in their operations across the enterprise. Doing so will help them optimize the entire manufacturing network.
No one knows for certain whether or not the surge in demand industrial equipment manufacturers are experiencing will continue. But IE companies that adopt the actions described, designed to help them optimize their existing capacity and capabilities, will be in a better position to meet current and future demand.