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But what about those tasks that add very little value to the business or the end customer?
Manufacturers that outsource elements of their operation can free up vast amounts of space. Being really clear on core activities and then implementing proven strategies such as outsourcing allows manufacturers more time and floor space to focus on the parts of their business that count. Ironically, for many OEMs, the physical process of building, testing and shipping products aren’t really core activities at all when you compare them to product design, marketing and sales. So, what are your core activities? And how much factory space would you need if you were to focus one hundred percent on them?
Capacity Planning
Manufacturers are often expected to be able to ‘flex’ their capacity with customers demand. For some, with varied product ranges and customer bases that are diverse, when one product or customer is ‘up’, typically, another will be ‘down’ which helps soften the blow.
Manufacturers also tend to work with their customers across a range of different purchasing agreements. For example, some orders they receive will be fixed and firm to an agreed schedule providing long term visibility. Others, however, might be based on a service level agreement (SLA) whereby product is 'called off' on short notice as it is required.
Planning can become a challenge for manufacturers when they don't have forward visibility of customer demand. In addition, 'urgent' customer demands and/or revision changes have to be supported which means it is a constant juggling act for them to manage. It’s important that the sales/customer service team have regular business review meetings with the customer in order to provide as much forward visibility as they can to the planning team. It’s also important that the planning team don’t commit all of their resources at any given stage in order to retain the ability to 'flex' when unknown demand presents itself.
New Opportunities
As the manufacturer grows it’s important that the commercial teams balance taking on opportunities from existing customers as well as brand new ones. A good starting question for the team to ask when presented with any new opportunities is ‘why us and why now’? With a finite amount of quote resource available it’s vital the manufacturer focusses their attention in the right areas and in order to do so, they need to be clear on what an ‘ideal’ customer looks like and what a ‘good’ piece of business really is. Creating customer persona or profile documents can really help the commercial team visualize this which in turn can help them qualify (in or out) new opportunities quickly. And if they struggle to define what an ideal customer might look like, ask them to write down all the reasons why they wouldn’t trade with someone and then turn each of the negatives into a positive!
So, no, running a manufacturing facility isn't 'easy'. OEMs rarely know what is coming their way and as a result they need to constantly review what their business needs are today as well as what they will look like in the future. Thankfully, savvy OEMs free themselves up from much of the burden associated with manufacturing and outsource all the non-core activities of their business to Electronics Manufacturing Services providers. This leaves them to focus on what they are really good at, so they can enjoy the fruits of their labor and growth, rather than worrying about how it could catch them out.
This article originally appeared on the JJS Manufacturing blog, which can be found here.
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