Pearson on Excellence: Leading manufacturers thrive in a world of ongoing volatility and uncertainty

Volatile markets. Unstable currencies. Vacillating demand. Unpredictable commodity costs. Manufacturers, like most companies, have plenty to worry about.

By ·

Volatile markets. Unstable currencies. Vacillating demand. Unpredictable commodity costs. Manufacturers, like most companies, have plenty to worry about.

However, there is a small segment of manufacturers that consistently increases profits and maintains growth—in spite of all of the challenges mentioned above. According to a recent Accenture survey, this group comprises about 9 percent of our survey respondents. On average, they have increased production levels, profitability, and labor efficiency by more than 10 percent since 2011, and anticipate similarly strong results in the near future. The primary goal of the survey was to discover what these leading manufacturers are doing better than everyone else. Several areas surfaced: technology investment, strong service culture, and enlightened leadership.

Yet, one factor was particularly prominent: The ability to flexibly and dynamically alter production to match demand. In other words, the operating models of these high profit, high growth companies accommodate a near constant shifting of resources and activities to different locations across their supply chain and manufacturing networks—and even within specific facilities.

Compared to the other 91 percent, the leading manufacturing’s are twice as likely to have relocated manufacturing operations since 2011; to have started new operations during that time; and to be considering relocating manufacturing operations in the near future. They are also more prone to:

  • Rely on modular business processes that allow them to quickly reallocate manufacturing capacity.

  • Have extensive visibility across the supply chain, thus helping them make informed, flexible decisions about how to handle demand.

  • Excel at sensing market changes and opportunities.

  • Employ diverse workforces that include full- and part-time employees, contractors, and consultants.

  • Build programs focused on extending the life and contribution of existing assets, particularly through total productive maintenance (TPM) and analytics.

From this group of leading practices, Accenture has identified four “flexibility enablers,” or exceptionally desirable capabilities for manufacturers seeking higher profits and stronger growth:

Control towers. Control towers offer manufacturers “integrated visibility” into demand; capacity (suppliers, manufacturers, distributors); inventory; orders and shipments in transit; and the activities of supply chain partners. Control towers can also help companies use the data they collect to respond more quickly and decisively to changes. For example, by leveraging predictive analytics, manufacturers can set alerts to flag potential issues and run simulations to model the potential outcome of various decisions.

Contract manufacturing strategies. Our survey revealed that many manufacturers plan to use more contract manufacturing in the coming year. However, the predominant reason is to relieve temporary (short-term) capacity constraints, which is not a particularly strategic, productive, or flexible way to leverage contract manufacturers. Utilizing contract manufacturing more strategically begins with careful consideration of what the company should be outsourcing and what it should keep in house. Next, they need to understand how to outsource—something that is not as self-explanatory as it seems.

Manufacturing leaders, for example, appear to put a lot of thought into what kind of contract manufacturing relationship is right for them. They also make fact based decisions about what tools and capabilities are needed to effectively monitor and manage the relationship .

Production systems. Think of a production system as an integrated governance tool designed to help manufacturers operate globally repeatable and consistent manufacturing processes, efficiently re-allocate manufacturing capacity, ensure continuous improvement, and eliminate waste. Production systems are increasingly important to achieving the highest concurrent levels of flexibility and consistency. To be effective, a production system must be tightly linked to a company’s overall business strategy. It should also be based on lean principles that emphasize customer focus, process standardization, and waste elimination across the enterprise.

Enlightened asset management. Highly effective manufacturers consider asset reliability a shared responsibility between production and maintenance. They also excel at using predictive analytics to create models that highlight the likelihood of various events and the impact those events could have on an asset’s performance. Most importantly, successful manufacturers don’t neglect maintenance during times of austerity.


About the Author

Mark Pearson
Mark Pearson is the managing director of the Accenture’s Supply Chain Management practice. He has worked in supply chain for more than 20 years and has extensive international experience, particularly in Europe, Asia and Russia. Based in Munich, Mark can be reached at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Manufacturing · March 2014 · All Topics
Latest Whitepaper
Making the Case For: An Automated Dimensioning Solution
Read our new Making the Case download to learn how a growing number of shippers are managing these market pressures and realizing significant ROI from investments with the help of automated dimensioning solutions.
Download Today!
From the December 2017 Logistics Management Magazine Issue
Trade and transport analysts see rates rising across all modes in accordance with continued expansion of domestic and international markets. Economists, meanwhile, say shippers can expect revenue growth in transport verticals to remain in the 3%-plus range.
2018 Customs & Regulations Update:10 observations on the “digital trade transformation”
Moore on Pricing: Freight settlement and your TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2018 Rate Forecast
Join our panel of top oil and transportation analysts for an exclusive look at where rates are headed and the issues driving those rate increases over the coming year.
Register Today!
EDITORS' PICKS
Building the NextGen Supply Chain: Keeping pace with the digital economy
Peerless Media’s 2017 Virtual Summit shows how creating a data-rich ecosystem can eliminate...
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...

2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...
26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...