In today’s business environment, with the proliferation of smarter handheld devices, wireless technological advances and globalization, mobility has now become inevitable for enterprises.
This is part one of a two-part series on leveraging mobility to extend Lean manufacturing. Part two will appear in Friday's MBT Mid-Day Report.
Though we might not realize, we are in the midst of a mobile computing evolution era. Today, the consumer as well as enterprise workforce has become increasingly mobile and ‘always-on’. They are demanding any-time, any-location and any-device information access without being chained to their desktop or office premise. In today’s business environment, with the proliferation of smarter handheld devices, wireless technological advances and globalization, mobility has now become inevitable for enterprises. The same is largely true for manufacturing enterprises as well.
The primary challenges that enterprises in the manufacturing industry face are very similar to other industries, however they are aggravated by the long and complex supply value-chain. Recent economic turmoil and market instability has resulted in increased pressure on industry’s wafer-thin margins leading to closure of high-cost manufacturing facilities, bankruptcies, frequent workforce downsizings, and product recall nightmares. This has inevitably led enterprises to find alternative approaches to reduce their supply chain cost to remain competitive and sustain in a cut-throat environment.
To achieve cost optimization, many manufacturing enterprises have embarked and capitalized on Lean initiatives. It has helped enterprises to standardize and simplify their core business processes as well as eliminate waste or non-value added activities, and thereby bring higher efficiencies. In their Lean transformation journey, enterprises are now struggling to additionally improve on automation and achieve further cost reductions. It has eventually put more pressure on their workforce to improve their productivity and responsiveness, and for enterprises to increase collaboration with their customers and suppliers. Enterprise mobility presents an unparalleled opportunity here to bring more agility into the entire value stream in order to augment existing Lean transformations.
Mobility has aggressively breached the sphere of the core manufacturing processes, and extended them onto the portable handheld devices. It is now delivering on-the-go critical functions such as shop-floor automation, inventory management, logistics, asset tracking and maintenance, warehouse operations, customers and partner collaboration, and so on. Manufacturers can leverage mobility-enabled solutions to further reduce their costs and become Leaner enterprises.
INTRODUCTION: UNPRECEDENTED EARLY STAGE GROWTH OF MOBILITY
Mobile devices are taking over the world, and drastically altering the way enterprises run their business. This change is led by the ‘Connected People’ who wanted to be on-the-go yet accessible, within or outside the four walls. Gartner predicted that there will be a 90% mobile penetration rate with 6.5 billion mobile connections by 2014.
With nearly 250 million smartphones sold in 2010, and tablet sales expected to reach 54.8 million this year, smartphones or tablets have reached the stage of disruptive innovation. Today, these devices have become persuasive, having multi-core processors, large storage capacity, high speed connectivity with a 3G or 4G network, full HD video recorder, 10+MP camera, GPS, accelerometers, gyroscope, ways to access pervasive internet, and instant access to thousands of downloadable apps from stores. Even, Near Field Communication (NFC) will be available this year. Similarly other trends in mobility continue to stretch out market assumptions such as credit card readers for smartphone payments (Square), mobile action codes (QR codes, Microsoft Tags, 2D Barcodes), mobile social networking (one out of three Facebook users access social network through their mobile phone), and location-based mobile marketing. These kind of specifications and innovations make any latest device capable of performing complex functions through running rich native as well as web browser based applications, thus significantly reducing the gap between personal computers and mobile devices. A recent study carried out by Morgan Stanley predicts that Smartphone shipments will bypass PC shipments by 2012. It shows why mobile has become ubiquitous, and opened up numerous unexplored avenues for business.
There is a mounting acceptance from consumers on differentiated products. As per company data, Apple iPad2 reached the milestone of one million units sold in its launch weekend only, where its predecessors iPad took 28 days, iPhone around 74 days and BlackBerry over 300 days. This trend is not only for technology products and in developed economies, however a similar phenomenon was observed in emerging economies with several non-technology products also.
This unprecedented expected growth of mobility and its applications market, with nearly 5 billion mobile phones subscriptions today itself (over 70% of the entire world population), have made it inevitable for enterprises to relook their overall mobility strategy, and focus beyond emails, calendar, and contacts to invest into mobile enabled core enterprise applications.
CHALLENGES: TODAY’S SCENARIO OF MANUFACTURING ENTERPRISES
Today, global sourcing from low cost regions, extensive use of contract manufacturers, consumer expectation for rapid response to demand, and slew of new product introductions are some of the trends making supply value chain more convoluted than ever before. The geographical boundaries have also become increasingly porous due to rapid globalization. With this global expansion, the manufacturing industry has been exposed to innumerable new challenges including increased supply chain risks, heightened competition, multiple decentralized networks, complex environmental and regulatory compliance, and so on.
Supply chain uncertainty, especially the demand volatility, has permanently increased. This is primarily driven by competitive challenges and constant changes in consumers buying behavior. Consumer expectations continue to increase while their brand loyalty diminishes. These consumers, especially from emerging economies, are expecting influx of more localized products with many variations, resulting in mass customization, supply-demand misalignment and increased product complexity.
Enterprises are forced to keep launching newer enhanced versions of existing products in order to remain competitive and avoid commoditization. Their products and services leverage the latest technologies in order to provide customers a unique and delightful experience. These products have faster time-to-market needs, short-lived lifespan, rapid obsolescence and rapidly falling price curves. According to the recent survey conducted in Jan, 2011 by Supply Chain Management Review (SCMR) in conjunction with Oracle and Infosys, roughly one out of three high-tech manufacturers develop products where the average lifecycle is under 1 year and almost one-half develop or distribute products having a lifecycle of 18 months or less. Another survey study by PRTM indicated that high-tech firms adding on-average 1.7 new products for every product retired.
Manufacturing enterprises have acknowledged that the cost optimized supply chain is the mantra of success. They are focusing on higher gross margins, not from pricing power, but from further reductions in costs. Many enterprises have embraced new concepts like Lean or Total Supply Chain Cost Engineering, an integrated approach for calculating and managing total cost across all supply chain critical functions. Rigorous cost optimization across the end-to-end supply chain from order management, sourcing, shop-floor operations to logistics are critical for their success. In addition, business functions are also being impacted by the constraints posed due to the need of physical presence. People are not enabled to take important actions and decisions at critical times. The time lost in completing these actions can be the game changer for manufacturing enterprises. There is a need to enable the enterprise workforce to overcome these barriers.
The SCMR study confirmed that initiatives to cut supply chain costs, increase fulfillment efficiencies, improve customer and supplier collaboration and new product innovations are all being emphasized at the present time, with cutting cost is the top most agenda. Solutions that help them implement these initiatives are highly valued.