In the wake of COVID-19, supply chain interruptions and ever-growing political uncertainties, companies need to rethink their global supply chains. The question is how. Many speculate on nearshoring, strategic supplier partnering, massive considerations about the future of China, stock levels and S&OP capabilities. However, it is time to consider not just the configuration and management of the global supply chain but also a revised manufacturing strategy and manufacturing footprint. It would be wrong to assume that production tomorrow is the same as production yesterday. Much is happening in the manufacturing world, and new ways of producing will impact the configuration of the overall supply chain.

 

The requirements for future manufacturing

Below, we have listed the five most important requirements – as we see them – that new manufacturing strategies should be able to respond to.

1)      Sustainability

Yes – it is still important. And more so than ever. Not just because of the environmental impacts but also because consumers are becoming more assertive and because the greenwashing days that many companies have lived happily by simply are over. New, firm regulations and measurement methods are being introduced, consumer opinions are moving fast, and sustainability and the way we think about it constantly change as we get more knowledge. What seems right today might be wrong tomorrow. Therefore, your production needs to be able to adapt fast to new sustainability requirements.

 

2)      Resilience

This is a requirement for the overall supply chain and the manufacturing component. It implies the ability to scale up and down effectively and to continue production despite adverse external events (e.g., gas supplies, fire, key employees’ absence).

 

3)      Adaptability

We live in an increasingly dynamic world – consumers demand changes faster than ever, new products are introduced customised products are high in demand, etc. Ramp-up and ramp-down costs and quality play an important role. This makes it essential for manufacturing plants to be able to adjust.

 

4)      Efficiency and quality

The evergreen criteria for successful manufacturing are as important as ever. As more production is nearshored, where factor prices are higher than in an offshore setting, every bit of efficiency you can squeeze out is of importance. And if you can increase quality so that it again becomes a competitive parameter that matters for consumers – even better! “Made in Europe” should inherently be better and positioned higher than “Made in China”.

 

5)      Workforce independence

Near-shoring means setting up production in a part of the world where labour is scarce, so resilience towards manpower is also evident. We should aim for production free of manpower and only add people where technology cannot efficiently solve the problem.

 

The issue with the five requirements is that they are interdependent and sometimes counter-productive; your decision on one requirement will impact another.

E.g., if a great focus on sustainability could create tight technical requirements on raw materials to produce your product, but this could reduce your resilience as you have very few suppliers of those specific raw materials, which do you choose? Or, if high adaptability to new demands from the market might create less automated production, but this creates more labour-intensive processes and reduces your workforce independence, which do you choose?

In other words, you need to keep a holistic view and understand the impact on individual requirements when creating your vision and roadmap for the five requirements. Be very specific on how you prioritise the five requirements, and what you can accept and not accept for each requirement.

You need to facilitate a thorough process where all relevant knowledge in your company is represented to ensure that your choices do not create unwanted issues in other dimensions and that manoeuvrability and competitiveness are kept up.

In future articles, we will explore the trends leading manufacturing companies to explore and meet the demands articulated above – and how they navigate the dilemmas between these dimensions.

 

Valcon has a proven track record in actively using mechanical design as a lever to release operational excellence and supply chain potential. Read more about how we help our industrial clients here or contact Poul Skadhede at [email protected] or Morten Just Blangsted at [email protected].