Bob Parker, Pierfrancesco Manenti, and I recently took part in the Next Generation Manufacturing conference hosted in Spain, with a conference theme centered on managing complexity. Early in the proceedings, a distinction was made between "complication", essentially waste that should be eliminated, and "complexity", a fact of life in modern manufacturing given the advanced products, dispersed supply networks, and multiple sales channels. This theme continued throughout the conference;
Tailoring Supply Network Design
This group looked at and discussed the classic tradeoffs in the supply chain between service levels/availability and network cost/inventory. The group asserted that a company's approach to supply network design should be shaped by the critical success factors that are most relevant to the business models. The group made some final recommendations with the overarching viewpoint that the goal of supply network design should be a dynamic and responsive economic model. Essential to this goal is a clear understanding of an ordered set of sales priorities (rather than trying to do everything), an awareness of regulatory issues, and a willingness to innovate. In further conversations during the conference, we talked more about the role of supply chain segmentation.
Improving Sourcing Decisions
The group discussed the many elements that create complexity in sourcing today - accurate landed costs, linking procurement to customer demands, and understanding regulatory implications. In line with the objective of the discussion, the team came up with three detailed recommendations:
- Follow the market.
- What do customers want?
- Is there local content?
- What are the market expectations?
- Understand total product costs throughout the entire lifecycle.
- Create agility and speed through experienced cross functional teams.
One thing was clear, there is tremendous opportunity to improve sourcing performance through both applying the traditional fundamentals (commodity management, etc.) and incorporating new, rich information sources to empower sourcing teams.
Planning for the Factory of the Future
This group of experts made a very wise first step and defined what "future" meant and decided the best timeline would be 15-20 years. They created a vision of this factory that was ambitious but very reasonable. They identified three specific goals for these plants:
- The right level of automation
- Agile, digital, modular and flexible to cope with demand shifts
- Environmental consciousness
- Integrated processes
- Including the involvement of suppliers and customers
- Greater connection to product design decisions
The presentation from this group became a topic of great dinner conversation. European manufacturers are very interested in getting to these future factories and may even plan to get there before 2025.
Identifying the Challenges Underlying Product Complexity
This group began by outlining the substantial challenges presented by this topic, more specifically for products with embedded systems. They identified the following issues:
- Lack of repetition can cause errors
- Problem of equality between hardware and software (different design change cadence)
- Re-iterative testing
- Problems can be from over-engineering
- Problems with financial engineering
- Problems with customer requirements versus cost
The group didn't have the answers but were hoping to explore the topics at the conference. While this was accomplished to a certain extent, this is definitely an area for more exploration in future summits.
Creating Workforce Strategies
This topic may have been the one that provided the most fodder for follow up discussion from the opening keynote panel on mindset change to the closing summary. The group expressed the frustration that finding qualified managers (as opposed to entry level) in emerging markets for operations activities in sourcing, production, inventory, and logistics was particularly difficult. Keeping employees once hired was even a bigger challenge given a substantial amount of poaching exacerbated by a limited pool of experienced workers.
The team identified outsourcing as a possible solution, but cautioned that companies must understand that while they were handing off the process, they can't abdicate responsibility for the performance. Delegates also encouraged the use of mentoring including a mix of "reverse mentoring" that allows younger employees to teach your experienced team about those markets (and perhaps other things like using technology) while they are gaining valuable process expertise. The group also called for an overhaul of performance appraisal systems which are often outdated. We see plenty of possibilities for technology to support employee development and cross training processes.
Improving New Product Introduction Performance
This group discussed how New Product Development and Introduction (NPD/I) wasn't only about getting the product into the mainstream supply chain, but to do so in a way that minimizes cost and disruption. It was emphasized that it shouldn't be "introduction at any cost". Specific areas identified by the group included:
- During the launch phase it is critical to have early collaboration across functions
- Have a project manager with full lifecycle responsibility
- Get buy in from senior management
- Assess and correctly deploy resources
- Listen to what the customer wants and not what the company thinks they want
The group also encouraged the use of continuous improvement discipline of "plan-do-act" to drive process improvements. Not surprisingly, much of the lingering sentiment was about adding more discipline to what should be a collaborative process.
These topic discussions and themes continued through the workshops and case study presentations over the two day agenda. These sessions focused in on the people, process, and technology necessary to be successful in the next generation of the manufacturing industry. The three major conclusions to be drawn include:
- There is a direct connection between managing complexity for competitive advantage through collaboration and better decision making
- Manufacturers need new models for leadership and learning, as well as finding and developing talent (influential versus hierarchical leadership, how to foster collaboration among those not in reporting line).
- Manufacturers are placing a renewed emphasis on the customer and customer service, understanding what the customer wants, as key to economic growth and manufacturing growth.
Overall delegates were optimistic about their company's long term prospects, but appreciated the opportunity to share challenges and strategies with their peers because success will not result from "business as usual" approaches.
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