Manufacturing management can be challenging. Just when you think you’ve solved one problem, the next one raises its ugly head. Not only does it seem that you are always solving the next problem in manufacturing—the problems are arising faster than ever. It isn’t just your imagination—changes are happening more quickly than ever. Rapid changes in technology are transforming consumer behavior, customer demands, technical capabilities, and even legislation. This means that manufacturers need to change their practices to continuously innovate and streamline.
How the market is changing:
Technology innovation cycle is shorter. Technology improvements bring about many opportunities to add new services and cut costs. Advancements in technology enable greater manufacturing automation, new products, and service options. The problem isn’t advanced technology; the problem is how fast the technology is changing. It can be difficult to keep up.
Product life cycles are shrinking. Rapid changes in technology mean that product life cycles are shrinking. Think about the lifecycle of a mobile phone. New features and functionality are added every few months—a three-year old phone is considered ancient. This mentality is permeating nearly every manufacturing industry segment. What was new last year, is now old.
The world is getting smaller. Being competitive in today’s market means participating in the global marketplace. Being international is more than just sales; it includes global production and distribution as well. Many manufacturers are seeing more global competition which drives down prices.
Regulations are increasing. Thrown into this mix of industry transformation are increased regulations regarding sustainability and safety. The ‘throw-away’ aspect driven by shrinking product lifecycles have further drawn attention to the environment. In addition, with the globalization of the market, manufacturers need to consider international laws.
How manufacturers need to respond:
The market is changing and manufacturers need to change their business strategy and practices to remain competitive. Here are six business strategies that will help manufacturers compete.
Simplify manufacturing processes. Because manufacturers need to move more quickly than ever, it is critical to minimize production and design costs. Businesses can’t afford to implement processes with high costs and a long return on investment. Instead, manufacturers need to move to automated manufacturing and lean production to cut costs and deliver product quickly.
Narrow product focus. Market transformation may also require changing business strategy to focus on niche products and narrower markets. Instead of a broad product mix, focus needs to be on shortening product development and lead times and improving product and service quality.
Tighten controls. In order to improve product quality as well as meet new regulations, more money may need to be spent in quality control. It is more important than ever to establish repeatable quality production. In addition, manufacturers need to know the rules for international business and follow them.
Learn to be flexible and agile. To enable quick response to rapid changes in the market, manufacturers need flexible skills and resources. To create agility, they need to reevaluate organizational design to improve communication and generate quick response. Flexibility and agility will assist manufacturers in improving R&D efficiency and the pace and value of innovation. Those who fail to embrace the new reality will be left behind.
Expand operations. While narrowing product focus, manufacturers cannot narrow their geographic focus. Instead, they need to expand to include international sales, implementing multi-channel distribution systems and perhaps global production. Partnerships may be essential in order to improve time-to-market and lower costs.
Improve customer relationships. In a fickle marketplace, customer relationships are more important than ever. After-market service and maintenance have become even more important to the revenue stream and the profitability of the company. Manufacturers need to consider service as a product.
Sound overwhelming? Modern ERP can help
When you need to be more agile and flexible while streamlining processes, a modern ERP is your answer. A modern ERP, like Sage EM (formerly known as Sage X3) offers specialized add-ons while maintaining central data control. With this complete solution, you can streamline processes, produce a superior product, and improve customer satisfaction.
In the next few weeks, we will look at specific areas where an ERP can help manufacturers compete in this changing market. In the meantime, for more information, download our whitepaper, ERP: A Strategic Growth Driver for Manufacturing Firms.