Bottom Line: How fast a manufacturer can adapt to changing demands today defines how competitive they are now and how solid their foundation is for future growth.
Adapting fast to supply chain shortages, higher prices, and more urgent customer demands is the goal of many manufacturers, and for a good reason. Adapting faster than competitors earns more sales, repeat customers, and a solid reputation for responsiveness.
There is no shortage of challenges to grow more adaptable based on the latest Manufacturing ISM® Report On Business®. The eleven indicators show the need to adapt quickly to changing inventory management, pricing, employment, and order backlog conditions. Every month’s ISM report shows why manufacturers need a flexible foundation to adapt quickly to changing market demands.
What It Takes for Manufacturers To Adapt Quickly to Changing Demands
The faster manufacturers can adapt and modify everything from workflows to production runs, the more successful they are at meeting customers’ growing demands. And that needs to start by improving the foundation manufacturing relies on to get work done. Knowing the most inflexible areas of every production stage is the roadmap every manufacturer needs to know to improve.
For decades manufacturers have relied on rigid, static, disconnected manufacturing systems designed to squeeze the last ounce of efficiency out of production lines. Today, it’s the opposite. Production lines need to adapt to every customer’s unique requirements. For example, adapting a production line fast from discrete to batch is a competitive strength. The mindset to adapt more quickly needs to be a company-wide commitment for it to succeed, reflected from the shop floor to the top floor.
Here are the lessons learned from manufacturers who learned how to be more flexible and adapt faster than competitors:
- Identify where information bottlenecks are, starting with accounting, finance, ERP, and MES. Replacing rigid, siloed small business accounting systems that can’t integrate with manufacturing delivers greater visibility, control, and the insight needed to adapt faster. Relying on QuickBooks or Quicken to run a manufacturing company tells only half the story – the finance and accounting. Knowing how tradeoffs made on the shop floor impact costs, cost variances, margin, and revenue based on real-time production and process monitoring data is needed. Having accounting, finance, ERP, and MES on the same database sets a strong foundation manufacturers can build on to adapt quickly to customer and market needs.
- The more production teams own their goals and outcomes, the faster they can adapt. Use real-time data to drive ownership on the shop floor. The most important use of real-time data is keeping production teams informed of daily production schedule progress, how and why their contributions matter, and what’s next for them on the schedule. Real-time production and process data are the guardrails that keep every production line and entire manufacturing plant in sync with cost, output, quality, and yield goals. Consider how it can give employees ownership of their jobs and the results delivered.
- Real-time data is core to improving how fast any production operation can adapt. Having visibility and control of costs across the shop floor and knowing immediately how tradeoff decisions impact margins and revenues are table stakes. Knowing how production costs impact financial performance in real-time are the guardrails manufacturers need to adapt fast, reduce risks and seize opportunities. For example, knowing inventory levels, inventory per-unit costs, and product demand forecasts by each item on the Bill of Materials (BOMs) being used in production can save tens of thousands of dollars.
- Adapt faster than competitors by pivoting from one production method to another. The quicker a given manufacturer can adapt or flex production methods is core to being competitively strong today. It’s those manufacturers who can pivot fast from producing their main product lines to another, seeing fast-rising demand that wins more deals, earning customers repeat business in the process. Pivoting from producing one product to another faster than competitors also sets a solid foundation for future growth. Making that happen starts with insights gained when ERP, MES, accounting & finance, and other manufacturing systems share the same database.
- Adapt to labor shortages with lights-out manufacturing. Overcoming the obstacles of growing faster than expected gives any business new challenges. Today, one of a manufacturer’s greatest challenge is recruiting enough production workers. Adapting quickly to this challenge with an automated third production shift is proving effective for thousands of manufacturers across different industries. ERP systems with native MES capabilities are a natural fit for lights-out operations or lightly staffed shifts. They provide real-time production and process monitoring capability necessary to maintain production records and visibility in the absence of onsite personnel; they also can alert management and supervisory staff of issues that arise so corrective actions can be implemented as issues occur during unmanned or minimally staffed periods of operation.
Unleashing the next generation of growth for any manufacturer depends on how flexible they are today and how fast they can adapt in the future. A technology infrastructure that provides real-time data throughout the organization is key to implementing an adaptive manufacturing strategy. Parsing and analyzing this data in new ways and creating greater collaboration will enable manufacturers to make strategic decisions, adjust their production, and update their policies to align with current market conditions to drive profitability and growth.