As manufacturers continue to watch shrinking margins, they are facing unprecedented challenges developing products in a fast-changing, global marketplace. Manufacturers must become more agile and work smarter in order to be competitive.
With the increasing challenge to reduce price and exceed quality, coupled with the need to improve margins and meet customer needs, how can technology help the manufacturing industry work smarter and still provide the level of service its customers want? According to EDS, a provider of IT services to manufacturers, the following trends will influence companies in 2007.
1. Globalization – Companies must be able to leverage employees and resources around the world to meet the demands of customers. Seamlessly integrating suppliers globally into the supply chain allows manufacturers to increase innovation and speed up product development.
2. Market Volatility – Changes in client demands and fluctuations in currency are only two challenges that can affect a manufacturer’s operations. Companies need to be able to react quickly to potential impacts on profitability.
3. Increasing Customer Demands – Customers no longer want mass-produced products. They do, however, want products that they feel are customized to their own unique needs. Competition is driving prices down and customers have the tools to find and demand the lowest price. To compete, manufacturers must increase their product innovation and speed up the time to market.
4. Accelerated Product Innovation – Not only have customer demands increased, but customers also want the product now. To meet these demands, manufacturers must speed up design time and production processes to get new products to market faster.
5. Outsourcing of Non-Core Competencies – Outsourcing will continue to increase, as manufacturers realize its importance in combating shrinking profit lines. Manufacturers’ differentiators will continue to be kept in-house, while non-core competencies like CRM and warranty programs will be outsourced more frequently than not. Manufacturers will look to outsource complete modules or systems, rather than parts of their line.
6. Cost Pressure – To combat dwindling margins, manufacturers must always be looking at both sides of the ledger. Increasing profitability has to be a two-prong approach: growing revenue and shrinking cost.
7. Flexibility – To remain competitive, manufacturers need to produce multiple products on a single line or facility. Flexible assembly lines are, in many ways, the future of the industry. Flexible manufacturing techniques like programmable robots, instead of fixtures, allow manufacturers to move technology components and ensure the right capability in the right place at the right time. Manufacturers must also have the flexibility to meet changing markets by having the ability to quickly ramp up production at facilities in growing markets or suffer the costs of shipping.
8. Competition – The marketplace has grown and shrunk at the same time. Manufacturers who are agile, nimble and quick to adapt will grow, while those who are slow and large will struggle. Even if one’s marketplace may have once-upon-a-time been the United States, it is now, for better or worse, the world. This brings a whole new breed of global competitors.