During the pandemic, supply chains and manufacturing lines have experienced unpredictable supply-and-demand swings. As a result, companies are having to accelerate their efforts to become more agile to maintain their bottom line, and in many cases, just to survive.
It’s easy for the leader of an organization to say: “We need to become more agile.” But what does it really mean, and how does agility translate into business and manufacturing excellence? How is it evidenced by a manufacturing organization? And how does agility result in superior performance and a competitive advantage?
The answer lies somewhere in an old high school physics book.
Agility organizations can move easily and quickly. They can anticipate, forecast, and predict. And all this involves speed. However, speed is not the bottom line. In physics, speed lacks direction. Speed tells you how fast you are going, but it doesn’t tell you where you are going while you’re going fast.
Velocity, meanwhile, is speed with direction. For a manufacturer to be agile and meet the ever-dynamic world of supply and demand, it needs to focus on “agile velocity.”
Let’s look at agile velocity factors required by manufacturing organizations:
Agile Velocity through Competency
Agile velocity requires flawless knowledge. A competent manufacturing organization is one in which employees know their jobs extremely well, demonstrating consistency of knowledge throughout, regardless of departmental function or hierarchy.They have business and work processes that guide, direct, interpret and explain responsibilities. A competent organization continually captures knowledge and converts it into useful work methods and standardized best practices needed to control quality, and to enable employees to act quickly and accurately when necessary.
Competent manufacturing organizations also have proper risk management in place to anticipate and identify potential problems before they occur. The organization responds faster and more accurately to variances by referring to predetermined scenarios and utilizing established solutions.
Such organizations share knowledge throughout their reporting structure, across all departmental functions and across all levels of management. Training and development become part of daily routines, with knowledge delivered through numerous small increments versus large modules. Accountabilities for self-education replace full-time trainers and coaches. As a result, employees challenge each other to learn and understand.
When an organization demonstrates true competency, it can achieve maximum velocity.
Agile Velocity through Tools
The ability to identify variances in advance, analyze information quickly and make the right decisions makes a significant difference in achieving velocity. Tools for forecasting, modeling outcomes, integrating plans and resource schedules, and monitoring work execution are crucial. It’s all about analytics-driven conclusions and prescriptive decision-making.
This kind of speed and direction can’t happen, though, unless employees at the lowest levels are empowered to make decisions. It’s called “distributed decision-making.” To achieve this velocity, companies create a 360-degree accountability dashboard for every key role in their operation. The goal is to create a fully autonomous accountability feedback model that guides employees to make decisions and immediately act on issues that occur.
In this tightly coordinated environment, supervision and management focus on forward-looking responsibilities such as good planning and resource allocations. As a result, the organization design is changed from a traditional pyramid to more of an hourglass look, with a smaller and more cross-functionally integrated mid-level.
Agile Velocity through Processes
Agility also requires robust processes for planning, allocating resources and scheduling work. The sales and operations planning process is critical to forecasting customer requirements and allocating demand to production lines. The distribution optimization process is critical to accurately assign finished goods inventory to specific stocking or shipping locations that best fit market demand. Integrated work management processes are fundamental to flawless execution of plant and warehouse floor activities. The degree to which these planning and scheduling processes are timely and accurate makes all the difference to a company’s costs and customer service levels.
Agile velocity means product movements from inbound receipts of raw materials to customer acceptance of shipped products that occur flawlessly, without deviation to plan or schedule.
While many companies have good planning and scheduling capabilities, they continue to incur disruptions and failures because they haven’t fully enabled their processes. Different parts of the organization continue to work in silos, defeating the overarching business goals.
When processes are fully developed and integrated, product flows are seamless and direct, from supplier to customer. Lower costs and higher quality are the result of “process centering.” Simplification and streamlining further add to velocity as the organization becomes more agile.
Agile Velocity through Systems
Agile manufacturing organizations are supported with the right business and operating management systems. One of the symptoms of a non-agile organization is the degree of reactive and unnecessary work. Chaos is a sure sign that leaders don’t understand their organization’s lack of agility. Customer complaints, finger-pointing at suppliers, high levels of workforce attrition and even work injuries can all be indicative of deficient management systems.
Agile organizations recognize that their manufacturing management—at the corporate level or at the plant site—must have high visibility into their operations so that competencies, tools and processes can be optimized for operational integrity and efficiency. Performance reporting must be timely and insightful so that variations and deviations can be quickly resolved or prevented. Top-down and bottom-up engagement of the workforce is a must so that all employees (and contractors) are constantly given feedback for taking corrective actions.
Because management systems are only as good as the incoming data and the outgoing reporting, well-structured and integrated databases with supporting management analytics are important. Integrating mobile and stationary reports with digitization of performance analytics, standard operating procedures, equipment records and material specifications accelerate the velocity of manufacturing and distribution operations.
As more performance stability is achieved, an organization gains “headspace” needed to improve. Productivity rises, quality improves and workplace satisfaction increases.
The world is changing. Competition is changing. Customers move on. The attributes of a flawless, agile organization with velocity today might not be the same tomorrow. Given how fast everything changes, manufacturing organizations must constantly invest to become and remain agile. The longer an organization waits, the more it will fall behind.
Gary Traylor is a senior vice president for Myrtle Consulting Group, now part of Accenture. Gary leads the global chemical practice for Myrtle and has consulted to numerous industry executives over his career. Gary has led business transformation programs for chemical companies around the world and today helps clients develop digital strategies for next-generation capabilities.