The Survival of Manufacturing Firms Depends on Time

​Dr. Stephen Hummel, P.Eng
Strategy Guide, Berlin KraftWorks Inc.

COVID-19 has caused massive disruption. No matter the industry, every business has been reassessing, changing plans, and trying to find their way through the uncertainty. Manufacturing had already been evolving, but in the wake of this global pandemic manufacturers need to change incredibly fast in order to survive.  

Global trade has seen escalating tariffs, supply chain shortages, and closed borders. Advances in technology are accelerating, resulting in product and industry life cycles becoming even shorter and shorter. And on top of all that, social media is amplifying the good with the bad, resulting in escalating customer expectations. For years competitive manufacturers have known that their products must have a complementary service component to support the product. This has become even more prevalent with all this disruption. It’s no wonder traditional goods producing firms are finding it harder to sustain their competitive advantage.

How can manufacturing firms keep up with all of this change? Time has always been an important factor for success. Now, time is the competitive advantage. Firms need to look at their agility, ability to innovate, and the timeliness of their analytics if they want to keep up with their customers.

Agility
If we have learned anything from COVID-19, it’s that businesses need to be able to pivot. This applies to employees, capital equipment, supply chain, the whole team. In other words, firms must pivot not just one element of their business but their entire “system” to create and sustain a competitive advantage. Examine those firms who were able to pivot their production to needed medical supplies, equipment, or PPE. They were able to keep their teams working and ultimately supported the front-line workers. Firms who have agility can recover faster and with higher quality of results, for themselves and their customers.

Successful businesses collaborate. By fostering relationships with employees and suppliers we can create partnerships rather than strictly transactional relationships. Allowing employees room to experiment can generate agility through increased knowledge and understanding. Using this same approach, we can turn suppliers into partners, they work with us to deliver success. After all, it is a “system”.

How quickly can your business scale to meet increased demand? If your company cannot keep up, customers will move on. When looking at capital equipment, flexibility is critical. Assessing your entire operation for additional capacity can show how changing certain aspects can reduce waste and deliver higher value. If your firm can scale quickly, faster than competitors, then you have an opportunity to keep their customers, perhaps forever.

Innovation
There are three key sources of innovation for a company – employees, supply chain partners, and the customers. Employees are a company’s preeminent resource. Not only do they know the products inside and out, they understand all the details of the equipment that makes it. They must be partners in development and improvement. Their tacit knowledge gives insight that can lead to incredible innovation and efficiency, if given the opportunity.

Supply chain partners can be another source of innovation. Once again this is where a deeper relationship allows for better understanding rather than simply fulfilling orders. Capturing their tacit knowledge can be a game changer.

Take the time to listen to your customers. Find out what makes your customers successful and ensure your product is fulling actual needs. Listening and adapting with customer feedback is a key component of service, and an additional source of competitive advantage as service is a very difficult for a competitor to copy. Monetizing your customers’ tacit knowledge results not just in better recurring business but a stronger sustained competitive advantage.

Analytics
Data leads to decisions. While most businesses track a number of different statistics, unfortunately many of these are not measured immediately (financials are a good example of this). Businesses need to focus on what they can do right now. Start by measuring one day – Were all of the orders that came in fulfilled today? Was there any excess capacity? Could there be? By using timely data, businesses are in a better position to adapt to changing conditions. The trick is to find those leading measures that link directly to lagging measures such as financial performance.

The manufacturing industry is rapidly changing. Firms that are agile, innovative, and able to access timely data can position themselves to successfully evolve. Please remember - many ideas may fail, but you have to keep trying! By looking ahead and experimenting, your team gains valuable knowledge and will be ready when it is time for change. Bottom line, time is the only resource that, once used, cannot be replenished. Agility, Innovation and Analytics optimize the time that your firm has.