Cindy Jutras: Collaboration calling: Work together now to set proper expectations
When costs rise in an already-troubled economy, companies naturally look to tighten their belts. Recent Aberdeen research finds the need to reduce costs as being the top pressure driving business strategies. Yet as the complexity of manufacturing increases from high-volume, low-value repetitive to low-volume ,high-value “to-order” environments, the challenge to reduce costs also inc...
When costs rise in an already-troubled economy, companies naturally look to tighten their belts. Recent Aberdeen research finds the need to reduce costs as being the top pressure driving business strategies.
Yet as the complexity of manufacturing increases from high-volume, low-value repetitive to low-volume ,high-value “to-order” environments, the challenge to reduce costs also increases in complexity.
To sustain performance and profitability, “complex manufacturers” must shift the focus of enterprise application deployments to develop a more collaborative environment to integrate functionality to enable quality, speed, and agility. The end result enables visibility from the initial engineering design through manufacturing to quality control and customer service.
All this can inevitably lead to a more profitable business, and greater customer satisfaction.
What do complex manufacturers make? The answer is anything from airplanes to heavy equipment to power plants—or even smaller but highly engineered products. It may seem like a no-brainer to say that complex manufacturing isn’t as simple as building widgets, but the implications are far from simple.
Volatile energy costs translate to unpredictable manufacturing costs and facility costs. When products are complex, large, and heavy, energy costs are reflected in escalating transportation fees. The pressure to improve response time and customer experience takes on a whole new meaning when designing, building, and delivering to customer specifications.
Up front in the sales cycle, “to-order” manufacturing requires a quick and accurate quoting process. A quote that is too high could result in lost business, while a quote that is below cost may negatively affect profitability. In addition, complex products may well require a greater number of specialized component parts that must be managed across a complicated supply chain.
Engineering, manufacturing, quality control, and customer service must work collaboratively to set proper expectations with the customer up front, and ensure that the final product meets customer needs. Design engineers must collaborate with manufacturing operations to ensure manufacturability, and with service technicians to ensure serviceability. Quality needs to be part of every function, and costs must not fall only under the purview of accountants. Even after the sale is made, customized products tend to have long service life cycles that require after-market service and continued support.
Aberdeen often recommends enterprise applications (ERP in particular) as a means to increase visibility and standardize both manufacturing and nonmanufacturing processes. These capabilities represent the first step toward a unified and collaborative manufacturing operation, with all members working toward the same goal.
In a “to-order” manufacturing environment where customer specifications vary, the supply chain is increasingly complex, and the service life cycle is more demanding. Complex manufacturers will find that business processes and technologies that enable collaboration and visibility are indispensable to success.
Get more information on the role enterprise applications play in providing visibility and supporting collaboration in complex manufacturing environments.
Cindy Jutras, who oversees research and client development related to manufacturing at Boston-based AberdeenGroup, has more than 30 years worth of ERP and supply chain-related experience. Cindy, a former director for a prominent enterprise vendor, has authored numerous white papers as well as a book titled ERP Optimization.
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey