Fixing the footprint: achieve performance excellence in global manufacturing
Manufacturing companies face intense pressure to achieve performance excellence across their global production networks. To compete in today’s market, they need to reduce costs, improve productivity and seize new opportunities.
At the same time, they must address complex challenges as market demand shifts to new geographies. In practice, performance excellence means constantly reviewing and adjusting production network capability and structure – something that is easier said than done.
You can achieve Performance Excellence in manufacturing production by focusing your efforts on three key activities: evaluating opportunity, assessing the challenge, and finding a balance between process improvement and cost control.
Evaluating opportunity in global production
If you operate in a highly competitive market such as commodities, you can only secure healthy margins if you constantly monitor your cost base. To this end, an important consideration should be the performance of manufacturing assets. Consolidating unused capacities and unlocking global labour costs can make you more profitable. During crises, you need to adjust production capacity extremely quickly to offset plummeting demand.
There are a number of initiatives that should be considered for long-term profitability, including home-shoring and in-sourcing as well as horizontal and vertical consolidation. You should also take advantage of emerging technologies like 3D printing, the ‘internet of things’ and augmented reality – intelligent and unconstrained ways to create manufacturing performance.
As demand shifts from saturated markets to new geographies and emerging economies, you need to consider building new production capacities or migrating existing ones. This secures proximity and service availability for key local clients, meets regulatory requirements and reduces importation charges and landed costs. In such cases, the lower local labour costs are not the driver but still a welcome bonus.
Assessing the challenge within the production footprint
The strategic business benefits of adjusting the production footprint may be obvious, but many manufacturing companies fail to recognise the full implications of such an undertaking. Decisions are taken without accounting for unknowns in the equation, including cost and risk, cultural differences, and the complexity of knowledge transfer and quality assurance.
So, when transforming your manufacturing footprint, both the speed of implementation and the associated risks need to be acknowledged, which may mean that some improvements will be delayed. You need an experienced and competent project team, supported by determined and agile management, to anticipate issues and mitigate risks. A comprehensive planning process and a rigorous implementation management will avoid painful investments of unplanned energy, time and funding and secure timely delivery of benefits.
Balancing process improvement and cost control in production networks
Performance excellence in manufacturing can only be achieved if both process and structure are optimised at the same time. This means balancing continuous process improvement and structural changes with suitable consideration for landed costs, and maintaining flexibility to allow products and components to be moved seamlessly and cost-effectively between your internal and external production and supplier network.
This will minimise one-time effects of future changes and offset against still emerging risks such as currency shifts, employment cost changes, transport costs or fiscal changes. Achieving this requires a performance-orientated approach, coupled with intelligent organisation of production sites and processes.
We have worked closely with global manufacturing companies, for example Siemens, Draka, Kennametal and Stannah Stairlift, to optimise their production operations by sharing industry-leading knowledge of state-of-the art manufacturing technology and processes. This has included developing and delivering global transformation projects; mitigating risk; managing the design and build of new factories; and assessing how time, cost and technology will affect key processes.