Remember your college days when you just spent 3 hours in an Advanced Lab and arrived back to your apartment with a headache and your energy spent. With hunger calling, you go to the fridge and pull together a meal based on whatever is there – beans on toast or maybe a mystery meat chili. You did not think about a gourmet meal. You focused on solving your hunger with the ingredients available. With the current disruptions in Supply Chains, mystery meat chili may be becoming the norm. Let me explain…
In the past 24 months, we have had supply disruptions, port closures, canal blockages, plant shutdowns, the semiconductor shortage, shipments stuck on slow boats from China and political unrest, all causing major material shortages, price increases and product stockouts. To survive in this environment, we must rethink our supply chains to be more resilient to ensure we have the ability to support customers. If we do not figure it out, our competitors will.
This unprecedented level of disruption has challenged the way manufacturers act, and think forever.
From make to order to make from parts
I met with a Manufacturing Executive last week where we discussed the concepts of Make to Order vs Make to Parts. With the state of current part shortages, he stated “Production is scheduled based on what parts or materials are available, not what the customer has ordered. Then, we sell what we have.” This has become the new norm for production across the globe.
That made me think how this completely changes business dynamics. It goes beyond how we sell the products available. It drives the way we must operate to survive.
Who would have thought that my college experience would have prepared me for the new norm of running manufacturing operations?
Manufacturing in the “New Normal”
Manufacturing leaders are paying attention to the increasingly complex circumstances they face with renewed commitment. They are focused on how to manage business performance in the current environment while at the same time, planning for the future. In this changing manufacturing environment, the focus is no longer on capacity, but on the ability to respond quickly to customer needs and market changes while still controlling costs and quality.
Until recently, supply chains were mainly measured by efficiency metrics. Today, it is about resiliency and responsiveness.
Beyond labor productivity and asset-efficiency, the next performance leap in factories will be through end-to-end effectiveness of production systems. Mixed-mode manufacturing is becoming the new norm where you must support both process and discrete manufacturing. Your production processes must evolve to support the complexity of the current norm and dynamic future demand and customer requirements.
Recent years have challenged manufacturers with unprecedented levels of disruption, but not necessarily to the detriment of business performance. For many manufacturers, the pandemic accelerated innovation, adaptation and transformation. So I think my college experiences all those years ago, where out of necessity, I used what was available, has come to reality in business life. In some cases, we do not have the luxury to make to order and give the customer exactly what they want. We need the flexibility to have to think out of the box and the agility to maximize what we have available, to still give customers a great experience.