1. The Changing World of Manufacturing
Manufacturers are facing unprecedented challenges on many fronts and need to not only respond to the threats, but also leverage the opportunity of the challenges to drive greater success for their company.
- Global competition impacts almost every manufacturer, even smaller companies with limited regional reach. The threat is that competitors from almost anywhere in the world could offer your customers an alternative source for your products. The opportunity is that you too have the means reach potential customers throughout the world for your products.
- The pendulum of control has moved to the customer – your customers now dictate the terms on which you can do business with them. Lead times, service levels, prices, quality, and so on are all driven by the customer. Unless you can deliver accordingly, they can go elsewhere. The opportunity is to proactively offer your customers more than they expect to retain your existing customers and attract new customers from your competitors.
- A fundamental shift in manufacturing economics occurred during the 1990s. In all previous history, capacity and supply were the primary constraints – manufacturers managed and focused on producing as much as possible from the available capacity. Today, in most industries, global capacity exceeds demand which means that demand is now the primary constraint. The challenge and opportunity is to be demand driven – that is, moving from pushing production orders into the factory to pulling customers orders (demand) through the factory.
- As mentioned previously, manufacturers need to participate in a global supply chain network with customers, suppliers, subcontractors, and trading partners. The challenge is to evolve from a factory-centric orientation to a comprehensive manufacturing supply chain encompassing many participants. Tier 1 supply chain masters such as Wal-Mart, Ford, Toyota, Home Depot, and others are dictating how their suppliers operate within their supply chains. The threat is losing that business if you can’t participate as prescribed. The opportunity is being able to participate in more supply chain networks for doing business with existing customers and more customer companies.
- All the previous challenges are putting pressure on manufacturers’ profit margins. Manufacturers no longer have pricing power to determine the price they want based on costs plus profit margin. The market dictates prices. Unless you can offer competitive prices that are profitable for your business, your business outlook will be negative.
- Manufacturers continue to focus on reducing operational costs to improve margins. However, most companies have already plucked the low hanging fruit for reducing costs. The challenge is to eliminate waste and continually improve efficiencies and productivity. This cost management focus must extend across the entire organization, not just the factory floor.
- Innovation is still a major competitive weapon for manufacturers, whether it is product or process innovation. Developing and bringing new products to market faster and more frequently is a major opportunity for manufacturers to increase revenues and profitability, since new products command premium prices before competitors start offering alternatives.
- Manufacturers in an increasing number of industries face increasing global regulatory and environmental compliance requirements. Pharmaceutical companies need to implement more stringent tracking systems as defined by CFR 21, part 11. Food and Beverage companies face increasing regulation to ensure food safety. Chemical and Electronics manufacturers have to comply with hazardous substance reduction or elimination. Computer manufacturers have to provide end-of-life recycling for their products. Automotive manufacturers and their suppliers must track safety data. The list continues to grow… Manufacturers need to include regulatory compliance requirements in their business practices and systems with minimal additional overhead.
As we discuss the solutions from Microsoft and (partner name), we’ll show you how you can respond and leverage these challenges to substantially improve your manufacturing business.
2.Meeting the Needs of All Stakeholders
The automotive C-level executives have a challenge balancing the organizational objectives with company goals..
- Maintaining company profitability with reduced cost pressures from upper supply chain “gorillas”
- Reliance on too few customers increases risk
- Uncertainty associated with labor union contracts
- Strikes at assembly plants reduce demand for suppliers
- Maintaining competitiveness versus overseas suppliers
- Logistics concerns for supplying outside of local geographies
- Difficult to manage outsourcing contracts
- Difficulty in achieving increasing quality standards with existing equipment
- Unexpected fluctuations in demand promotes higher safety stock levels
- Inability to meet demand of product design collaboration
- Supplier relationship management is difficult with less sophisticated suppliers
- Inventory Turns (Velocity)
- On Time Shipments
- Managing data; too many separate systems prone to operational errors
- Applications are not efficient and expensive to maintain
- Difficult rationalizing ERP versus automation equipment expenses
- Difficult to keep up with industry EDI changes
- Lead Time (Information Flow)
- Collaborative design data format, integrity, and security
- Charge backs for noncompliance and delivery issues
- Unit cost difficult to determine due to high product mix
- Tooling cost increasing while model lifespan is decreasing
- Number and Cost of Unplanned Changeovers
- Traceability costs associated with government compliance
- Obsolete Material Inventory Cost
- Dollars Spent on Premium Freight
- A lot of players, a lot of needs, and a lot of potential roadblocks. Let’s look at some specific Business Issues (Pain Points) that we see companies trying to address