Manufacturing Success

Metrics

Learning to Survive in an Unpredictable World

By Michael Mantzke

The global market was changing rapidly before President Trump took office in January 2017, but continued change is expected to occur at an unprecedented rate. What does that mean for U.S. manufacturers? The answer: more than ever before, manufacturers need to access vital metrics to help run their operations. But the situation calls for a great deal more than just gathering data. For manufacturing companies that want to know what’s coming and what to do about it, the time has come to get systematic. This requires setting up a process for collecting the numbers, reviewing the data, and acting on the results.

Changes in the global manufacturing market

What kind of change is occurring in the global manufacturing market to warrant an investment in metrics? The simpler question is, “What kind of change isn’t taking place?” For starters, the industry’s role is changing. Not long ago, manufacturing and services were seen as two distinctly separate industries. By contrast, now a great deal of manufacturing’s active role centers around service inputs, for example with customer service or logistics. Also, consider that half of the people working in manufacturing perform service roles, such as support staff. Add the typical influence that industry uncertainty breeds to the picture, and it’s easy to see why words like change, volatility, and technology are in everything written about manufacturing. Other changes manufacturers are tackling include newly introduced regulatory risks, an alarming deficiency of vastly skilled employees, and the reality of unstable resource prices. Add to that:

 

  • Increased competition. The manufacturing industry is seeing an onslaught of small businesses setting up shop—most of them well equipped with aggressive strategies and lower overhead costs. Regardless of their size, these newcomers are a threat. Defeating them means playing by some new rules, and those rules favor metrics.
  • Time-to-market compression. Time-to-market refers to the time span from a new product receiving the go-ahead to the time when the final product is built and shipped to a customer. The time gap between those two momentous dates is filled with many complex steps that previously made predicting time-to-market almost impossible. Thanks to metrics analysis, manufacturers are finding new methods to optimize time-to-market. As a result, there’s been a significant compression. Competing with that compressed time frame could mean the difference between success and failure in a manufacturer’s new product rollout.
  • Appearance of next shoring. More manufacturers are shifting their strategies from outsourcing overseas to developing products closer to their point of sale. The trend is called next shoring, and ultimately it increases the speed with which stores can restock their inventory. In America, multiple catalysts contributed to this shift. For example: wage hikes in Asia, shipping costs on the rise, and a focus on compressing time to market.

Keys to global market survival

Surviving in manufacturing’s global market means confronting hurdles, and the major one is technology. It has been (and will continue to be) the impetus for what has changed and what will continue to change the look, the systems, and the processes that create America’s factories. The best bet for success in this new environment comes from accepting this reality and learning to understand it. In other words, work with the trend. For one, keep innovation a top priority, and let it drive opportunities. Other keys to a manufacturer’s global market survival include:

1. Acknowledge data as the driver. As Peter Drucker said, “If you can’t measure it, you can’t manage it.” Tomorrow’s factories will be data-driven, which requires manufacturers to live through the transition as they try to develop a new way of thinking. For example, break information into two branches of thinking: 1) infrastructure required to deliver the information and 2) ability to analyze and present findings. Every company eventually finds the best approach for gathering information and using intelligence to form the basis of decisions and operations.

2. Adopt new approaches and capabilities. Manufacturers will need to develop new ways to keep up with industry trends and generate market insights. It will become essential for a manufacturer’s data programs to be as relevant to the business as possible.

3. Increase agility. When applied to manufacturing, agility refers to a company’s ability to anticipate and become accustomed to market changes. Being able to foresee where market need resides and being ready to respond with whatever product or service constitute a manufacturer’s dream scenario. Unfortunately, it doesn’t always transpire so smoothly. Thus, agility is built into the scenario. For instance, one way a company stays agile is by keeping ERP solutions current. Agility also comes from having end-to-end visibility, a comprehensive view of business operations and the value chain. In addition, collecting and using accurate and meaningful data analytics are a must for staying agile. By using key performance indicators and staying on top of fluctuations, manufacturers can make decisions strategically about their next move forward.

Manufacturing metrics matter

Numbers are a manufacturer’s best friend. Not surprisingly, the metrics they provide are getting the attention of manufacturing budgets everywhere. When a company makes the decision to start effectively measuring, analyzing, and improving manufacturing metrics, it is committing to an enormous job—one worth every bit of time, capital, and effort. The outcome aligns metrics to business goals systematically. Metrics eliminate some uncertainty, increase visibility and offer a real shot at gaining a competitive advantage. Here’s why:

* They help cope with uncertainty. The only apparent trend in manufacturing seems to be ongoing volatility, which translates into uncertainty—a condition from which all supply chains suffer. One approach manufacturers take to diminish uncertainty is to increase their agility. But, agility looks different to every manufacturer, so it helps when they understand the nature of the uncertainties they anticipate. Remember, what can’t be measured, cannot be managed, so again it comes down to metrics. If a company plans to confront uncertainty by being more agile, then it’s time to establish some agility metrics.

* They increase visibility. Analytics (or metrics) are manufacturers’ window to what is possible, given their situation. For example, the increased visibility might tell a manufacturer which product lines will yield the lowest margins. Or, it might signal what can be done to help drive sales revenue, or highlight which supplier should be used to keep the supply chain flowing smoothly. The possibilities are endless—from improving product development to optimizing the supply chain.

* They produce a competitive advantage. Manufacturers that invest in data collection reap a definitive advantage as long as they’re equipped to use it wisely. Think of the companies out there currently collecting mounds of data, yet failing to use it for anything besides, perhaps, tracking the flow of production. In order for manufacturing metrics to offer a competitive advantage, choose the metrics carefully, know that the right system is in place, and hire the right individual to be there to interpret the data’s significance and relevance. Along with understanding numbers, it is important for data analytics professionals to have the skills to take the numbers and present them to others in a way that reveals meaningful truths.

Jump on the metrics bandwagon

One might ask, “Why doesn’t every manufacturer jump on the metrics bandwagon?” Those who are ready to let go of the reactive gut instinct that drives decisions are showing interest, but the real impact begins when there is a true commitment to the process. Regardless of market activity, industry volatility, or even adapting to a new president’s platform, sound, accurate data are now an essential means for surviving in this world market. By drawing on this metrics-driven visibility, manufacturers have carte blanche to the ultimate tool—real time information.

Michael Mantzke, CEO and Robert Jonas COO are with Global Data Sciences, Inc., headquartered in Aurora, Ill. The company provides scientific, data-focused approaches to developing and executing sound strategies to increase company value in the global environment. Areas of expertise include global operations, process and procedure optimization, systems integration and optimization, and cybersecurity and data forensics. For additional information, please call 630 299-5196, visit www.globaldatasciences.com, or email info@globaldatasciences.com 

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