8 September 2014
Six years after the global financial crisis, the world economy remains far from settled. While growth in Asia has been slowing, there are patchy signs of growth in Europe, and the US is finally building momentum. Yet the growth we are seeing in the West is different from that we had before, with increasing emphasis on digital channels and closer relationships with consumers.
As a result, there is ever more rich data available on individuals and trends, the diversity of channels through which consumers can place their orders has risen sharply, and today’s buying process is supported by a range of easily accessible new and emerging technologies. So the race is on for manufacturers to efficiently and effectively respond to customers and consumers looking for customised products and instant fulfilment.
The traditional manufacturing model – from raw materials to production line, from packaging to final distribution – was built for a different age. It is often slow, inflexible and is frequently a blocker to companies’ strategic ambitions. The ‘lean’ approach may have helped increase efficiency and brought improvements, but it is still based on the technologies and manufacturing processes of two decades ago.
For manufacturers to stand any chance of success in today’s global economic landscape, they need to consider how they can reinvent manufacturing processes and change how products are produced and brought together.
This reinvention is made possible by technology trends that are starting to enable new manufacturing and supply chain opportunities. High-speed robotics, production lines running at 1,000 bpm, low-cost electronics, advanced 2D digital printing, new materials, 3D digital manufacturing and rapid changeover and configuration technologies all have the potential to change the cost complexity paradigm. By building highly flexible and segmented end-to-end supply chains that allow demand and volume variability, by taking an innovative approach to supplier integration, and by putting more flexible manufacturing lines in place, manufacturers can achieve faster and better delivery at reduced lead times, as well as lower cost and greater flexibility.
The companies that take advantage of emerging technologies to make this step change in manufacturing will be the future winners. So, where is this happening? Who is leading the race to reinvent the old manufacturing processes?
Personalised products within the food and beverage, luxury goods and sporting goods sectors are becoming ever more common. However before they become mainstream, suppliers need to look beyond existing technologies. For example, we saw a global consumer healthcare company use new technology to change the point at which they add the active drug to medicines, which enabled customisation to meet market need later in the process.
We also see an increasing interest in companies looking to re-invent old manufacturing processes and with it enable new products.
One strong example is Ora, the ‘round kitchen towel’ that has helped its brand owner gain market share by being a ‘category-disruptive’ product. Supermarkets were interested in Ora, but it could not have been produced without a new manufacturing process.
Another example reinvention of manufacturing is a global food company that launched a winning ice-cream product. It needed to find a new way to produce the volumes required to satisfy demand while getting more value from its manufacturing equipment.
The answer proved to be by mapping the product’s journey from raw ingredient to point of sale, and brainstorming hundreds of new ideas for how the product could be produced for less cost. Eighteen of those ideas were developed into workable concepts, that could potentially save tens of millions of dollars through cost-of-goods reductions. Using its former manufacturing infrastructure, this would not have been possible.
Whether you are creating innovative products, reducing costs or personalising your products to increase margins, manufacturing reinvention will be critical to building your business for the future and delivering sustainable growth.
Tim Lawrence is head of manufacturing at PA Consulting Group