The researchers state that these two challenges raise a number of key questions for manufacturers who are searching for answers on how to deal with them.
Standard manufacturing strategies are no longer enough to overcome these challenges, say the researchers, who have also highlighted five capabilities that are needed if manufacturers are to respond to these challenges in their factories.
This research was conducted by Ann Vereecke, Professor of Operations Management at Vlerick Business School, Professor Kasra Ferdows, Georgetown University, US, and Professor Arnoud De Meyer, Singapore Management University, who wanted to understand the key challenges currently facing manufacturers, and how they can be overcome.
To do so, they created a framework based on the implications of these two recent trends. By using this framework, the researchers were able to identify specific approaches for manufacturers to overcome these key challenges. The five capabilities that companies can utilise for manufacturing to give them a competitive edge are as follows.
Expanding your view
Companies need to look beyond the traditional walls of manufacturing and integrate better into their immediate surroundings, connecting to larger numbers of their stakeholders to reduce potential adverse environmental, social, and regulatory effects.
Final assembly facilities may also need to be located close to consumption to be in sync with the customers and to enhance responsiveness and reduce transportation.
Utilising new technologies
Companies need to deploy new processes and technologies as quickly as possible if they are to get one step ahead. To implement these seamlessly and efficiently, companies need to be more open than usual to internal or external partners.
Selling solutions not products
There needs to be a greater focus on developing new capabilities to support, help or even lead the shift from providing mere “products” to providing “solutions.” Many customers are shifting from buying the product to buying the experience of using the product.
Leveraging intracompany networks
Organisations must leverage their own global manufacturing network to mitigate adverse effects of disruptions. A network of factories can cope with sudden changes in demands, disruptions in supplies and other unforeseen events much better than the same set of factories when they are run independently.
It also offers more opportunities for learning and knowledge transfer.
Building effective ecosystems
Companies must look to work effectively in intercompany networks and ecosystems. A shift to solutions, not products, demands more collaborations with the ecosystem partners, not only in the daily operations but also when innovating and creating new value for the customer.
However, the researchers say that it is not possible to excel in all five of these capabilities.
Focusing on a small number of them is enough to create a competitive advantage compared with companies who are simply using more traditional methods of boosting production.
Professor Ann Vereecke says: “Although manufacturers cannot ignore development of any of these capabilities, trying to excel in all of them would spread their resources and attention too thinly, reducing their chances of developing distinctive superiority in any one of them."
"And whereas some of these capabilities partly support and reinforce each other, a company benefits from clarifying which of these capabilities must be developed or deepened further to turn its manufacturing into a competitive weapon.”
The researchers say that these findings have important implications for manufacturing executives, who can no longer have an purely internal view when it comes to manufacturing.
These managers need to hone their skills in understanding what consumers want, and communicate this with senior management.
They also need to improve their knowledge of technology and how to utilise the abundance of data available to them, if they want to become the leader of the pack, and not just part of the peloton.
