Why Agile Operations Are Key

April 3, 2014
See how increased operational agility is helping manufacturers achieve operational excellence. Leading companies standardize processes and implement manufacturing operations management (MOM) software applications.

As a manufacturer in an increasingly competitive marketplace, there’s a good chance you’re on an operational excellence journey of some kind. And though your specific objectives may vary depending on the industry in which you operate, your geographic footprint, or your current strengths and weaknesses, chances are that achieving greater operational agility is one of your important initiatives. Agility is critical in allowing you to come closer to being a more customer-driven organization—which should be an important goal for any manufacturing company.

It’s interesting to note how focused manufacturing executives are on serving customers better. In our 2013-2014 manufacturing operations management (MOM) survey, when more than 325 manufacturing executives and decision makers across a wide range of industries and geographies were asked about their top strategic manufacturing objectives, the top three objectives were specifically focused on serving customers better.

This is a great sign, because if customers don’t feel served, ultimately nothing else will matter for a manufacturing organization. The second highest response, in particular—being responsive to customer demands—is one that speaks directly to having an agile, flexible operation. If you’re not able to deliver quality products within a prescribed timeframe to customers, they’ll find another organization that will.

In today’s market, customer expectations are higher than they’ve ever been. With the dynamics of supply and demand, unpredictable supplier delivery schedules, and fickle consumer tastes, the manufacturer that can respond the fastest and most efficiently to changes with consistent quality will win. So what are the main barriers to achieving this agility?

Another survey question asked respondents to identify the top challenges they faced in achieving their stated goals. As the second chart shows here, the top challenges involve dealing with silos, both people- and information-related. The two top responses were a lack of collaboration across different departments, and dealing with disparate systems and data sources, coming in at 26 and 25 percent, respectively.

If these challenges sound familiar, there are a number of steps you can take to enable greater organizational communication and information flow. Process standardization and integrated technology solutions play a big part.

It’s a best practice to have multiple departments share some of the same goals and objectives, and to be on the same page with data, information and KPIs. Leading companies are achieving this by having a combination of structured dynamic processes in place, which are enforced and supported by MOM software applications.

Our research shows that 73 percent of companies surveyed have formal manufacturing programs in place or planned over the next year. Most have a combination of programs rather than just one, with the most popular being lean, ISO 9000/9001, operational excellence, and Six Sigma. These types of programs are foundational to building collaborative and cross-functional processes that enable increased operational agility. But to be truly effective, they all require accurate and effective process management or workflow, along with in-context information.

MOM application functionalities such as quality management, planning, scheduling and dispatching, and manufacturing execution systems (MES) are leading the way in adopted software technologies among companies on operational excellence journeys, as the final chart shows.

Since this hierarchy closely aligns with the top objectives stated above, the list comes as no surprise. Quality management software is instrumental in the first objective of improving product quality by integrating quality with critical processes across the supply chain. Planning and scheduling and MES software are both proven tools for helping companies become more operationally agile and able to respond to customer demands.

The challenges around customer demands will only increase in 2014 and beyond, and the companies that are able to tighten up operations and achieve agile operations will be in the best position to remain competitive. Being on the cutting edge of the best methodologies for success through the latest research, benchmarking and peer networking is a key way to accelerate this journey.

>> Mark Davidson, [email protected], is a principal analyst at LNS Research.

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