2011 Predictions for Manufacturing

Dec. 27, 2010
traditional paradigms for business management are ineffective for today's hyper-competition.

A rapidly changing economic environment and customer profile, an increasingly demanding customer and intense competition makes for a mercurial marketplace. This has forced companies to re-examine their business processes and make changes that enable them to stay 'lean and fit' in order to survive. There are four core areas for a manufacturing entity which will determine its success in this new environment.

Single Value Chain Planning
With globalization, worldwide sourcing and production requirements, companies are increasingly relying on effective supply chain planning to align supply to demand, based on actual and forecasted numbers. The success of the supply chain management process can be identified by the speed and effectiveness of the response to planned and unplanned changes.

Single value chain planning speeds up the entire supply chain management process, enabling companies to plan across multiple distribution and production locations and time zones and perform simultaneous and accurate material planning. This planning system minimizes waste while maximizing benefits by integrating information on materials, labor, facilities, logistics, etc. into a responsive, capacity-managed solution. Manufacturing companies have also begun to restructure and reorganize their supply chains in order to cross-sell to their customers, thereby indicating that the benefits of an efficient value chain will percolate and create value for the end customer.

Tapping into Nnon-traditional Markets
With an increasingly globalized customer base in combination with growing expectations, the need for faster time-to-market for new products assumes paramount importance. The pressure to pick up the pace of innovation, align with the requirements of varied customer segments and gain access to new and non-traditional markets is continuously growing. Emerging markets no longer accept 'slimmer' or diluted versions of existing products and demand similar value at lower prices requiring greater innovation. Likewise customer preferences for usability, sustainability etc will pave the way for a new category of products. To gain a foothold in these markets, it will become imperative for organizations to manage a much more distributed yet connected innovation network seamlessly. Integrating product information through several layers of the enterprise and across the innovation network will become increasingly important. Digital validation and simulation will provide the platform to drive "frugal engineering."

From 'Manufacturing' to a 'Service' Orientation
Manufacturing companies today provide a significant 'service' quotient along with their products. This is an outcome of the service sector's scalability and profitability that in the long run, balances the vagaries of the product business.

There is a renewed interest in the service side of the business in manufacturing companies, heralding the transition from products to integrated services and solutions. This move towards a service portfolio was sparked by organizations looking to explore adjacent markets for growth and creating a more sustainable and value added relationship with their customers. This shifting requirement is paving the way for organizations to build capabilities in developing service catalogues, asset and usage monitoring, service contract management, cloud based source of asset configuration etc. As a result of this gradual shift, manufacturing companies will be able to bring about transformational differentiation in their offerings and create sustainable competitive advantage.

Capex to Opex
Amidst the prevailing economic uncertainty over the recent years, budgets were scaled down as companies postponed the upgrading of their IT assets. Today, market uncertainty has created the need for companies to divest the assets in their operations since capacity built up for peak demand becomes a potential liability during a slow growth phase. Organizations are rapidly seeking ways of channeling investments to a set of services that can be scaled up or down with relative ease versus managing the complexity of fixed in-house capacity. Manufacturing companies will increasingly adopt this shift from a capex to an opex model with the shift away from long-term asset investments heralding the creation of several business processes that can be managed as a service.

N. S. Bala Senior is Senior Vice President, Manufacturing for Wipro Technologies. Wipro provides integrated business, technology, consulting, testing and process solutions on a global delivery platform.

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