Adaptation and the Manufacturing Enterprise

When manufacturing or other companies strive for leadership, they consciously or unconsciously believe that market leadership provides an indicator of their chances for survival.

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This belief is based on Darwin’s theory, often summarized as “survival of the fittest.” Examined more closely, it says that the species that best adapt to the environment have the highest chances to survive. Adaptation can mean “fight,” but it could also be “flight,” or living in harmony with the environment. One often-overlooked aspect of Darwin’s theory is that the environment can also adapt to the species.

Arie de Geus, former Shell executive and author of “The Living Company,” found that long-lived companies are adaptive at all levels. The strategy process is the long-term embodiment of adaptation. This also includes adapting the environment: the biggest opportunities are in creating new markets, rather than in adapting to existing markets and competing for market share. Manufacturing operations, which implement strategy at the tactical level, need to support the adaptation of the strategy, both by directly providing internal feedback and by indirectly transmitting external feedback. This adaptation should take place within an appropriate time frame. This can be in real time, by dynamically adjusting the production process to improve product quality or order fulfillment.

Manufacturing information technology (IT) and process automation deliver business performance when deployed and managed to fulfill business goals. Structured implementations of strategy, with business goals defined for the different tactical components, such as manufacturing IT and automation, enable this performance, in particular, when they:
• Adapt to the organization and its processes and support the organization to adapt
• Support production to adapt to the enterprise functions, client requirements, and market dynamics
• Support product definitions to be adapted to manufacturing and market demands.

With “the survival of the fittest,” Darwin meant that species that best adapt to the environment—or adapt their environment to them—have the highest chances to survive. de Geus found that long-living companies are good at adaptation. The quality and the speed of adaptation, or agility, determine its effectiveness. Adaptation is the capacity to learn, to challenge beliefs, and be creative, by creating markets, for example, rather than reacting to them.

Adaptive manufacturing enterprise

In a dynamic environment, manufacturing enterprises need to adapt their strategies and if they can, adapt the (business) environment to them. Strategy is implemented by making changes in manufacturing operations. These, in turn, generate changes in the market and responses in terms of client behavior. Inside the company, changes generate internal feedback. Both responses provide input for further or renewed adaptation of the strategy. Strategy adaptation is a feedback loop in which the feedback has both an internal and an external component.

Two-way adaptation, in the sense of adapting oneself and the environment, is favorable both at the strategic and operational levels. Two-way adaptation can take place between the enterprise and its markets, among the operational and functional units, and between these units and enterprise strategy process. All functional and operational domains must participate: business planning and logistics at the corporate level, manufacturing and supply chain operations, and research and development (R&D).

For efficiency and effectiveness, products and processes must adapt to manufacturing. Close collaboration between research, product and process development, and manufacturing is required for good “manufacturability” and “maintainability.” The integration of manufacturing, R&D, and engineering systems can greatly enhance this process. It should be easy to compare products as produced with the design intent and make design modifications to improve efficiency and quality in production. It should take little effort to update and maintain product definition information consistently and at the granularity required in systems for innovation, manufacturing and the enterprise.

Valentijn de Leeuw, vdeleeuw@arcweb.com, is Director of Consulting, at ARC Advisory Group Inc., in Paris.

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