An adaptive manufacturing strategy starts with real-time data
To recalibrate as market conditions change, manufacturers need real-time data and applications that deliver information.
If there’s one thing we learned from the last year, it’s that what is true today may not be true tomorrow. Consider the just-in-time (JIT) manufacturing strategy, which excels during times of supply chain stability and predictability. But now, with limited supply chains, some manufacturers are stockpiling raw materials. Others choose alternatives, such as automakers using manual dials for entry-level models and reserving advanced electronics for their higher-end, more profitable vehicles. However, manufacturers must adopt more adaptive, contextually intelligent, and flexible manufacturing strategies to achieve long-term profitability.
Digital transformation is a prerequisite for implementing an adaptive manufacturing strategy, as using manual processes to achieve it is not scalable.
To recalibrate as market conditions change, manufacturers need up-to-date data and applications that put information into context and enable collaboration. When solutions like enterprise resource planning (ERP) and manufacturing execution system (MES) software allow teams in different functions to share and act on the same data in real time, manufacturers can get the collaboration and timely communications needed to adapt quickly.
Here are five common ways to implement adaptive manufacturing strategies in the real world.
- JIT vs doing to predict. JIT works well when raw materials, equipment and labor are plentiful. But with tight labor markets, higher material prices, and equipment operating near full capacity on short-term production cycles, planning ahead becomes essential. By using ERP for forecasting, scheduling and production planning, material resource planning, and master production scheduling, manufacturers gain the visibility and control to produce as planned.
- Fixed price or variable price contracts. In stable markets, long-term fixed-price contracts guarantee revenue flow and capacity utilization. In times of volatility, suppliers who can meet demand can also dictate prices. Here, ERP capabilities are invaluable for playing out what-if scenarios, guiding the most profitable production strategies, and automatically adjusting prices based on fluctuating costs. These factors taken together become powerful multipliers to take advantage of macroeconomic conditions of high demand and low supply.
- Build or buy plant capacity. Manufacturers often build more factory capacity on adjacent properties when resources are readily available. When construction resources are limited, ERP systems make purchasing existing facilities a viable option as they easily support multiple factory locations and automatically integrate established operating procedures in new locations. Additionally, multi-plant ERP systems provide remote visibility to all locations in a single view.
- Third shift with staff vs. Managing a third shift isn’t easy, but it’s a simple extension of operations. Light shifts are a leap in operating practices that typically require investments in automation and MES software. Yet the return on investment is significant in terms of labor and cost savings. ERP systems with native MES capabilities are uniquely designed to provide the scale that standby manufacturing needs to be successful. MES systems offer real-time production and process monitoring to maintain production records, as well as increased visibility and control 24/7 when needed. Exception alerts are automatically generated and sent via SMS to production and quality management teams if real-time production and process monitoring systems identify anomalies in workflows and performance levels. specific machines so that corrective action can be taken.
- To link or not to link the prices of materials and finished products. When supplies are stable, most manufacturers rely on their purchasing and sourcing expertise to meet or reduce original raw material cost estimates. With today’s volatile and limited supply chain, many manufacturers negotiate the variability of raw material costs in their production contracts. Managing the link between the cost of raw materials and the price of finished goods requires a comprehensive inventory and procurement control system that works in conjunction with production planning and execution which is tracked at the batch and batch level. . This enables the costs of raw materials to be precisely matched to the production prices of the finished goods, protecting profit margins when costs rise and managing revenue expectations when material prices fall.
The key to any adaptive manufacturing strategy is hidden in the real-time production and process monitoring data produced by manufacturing operations every day. By capitalizing on real-time data to uncover new insights, manufacturers bring greater precision to strategic decisions and greater visibility and control of day-to-day operations. By using the insights provided by real-time data in new ways, manufacturers can make more profitable strategic decisions, adjust production and update policies to align with current market conditions to generate profitable growth. .
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