What can you do to address the major challenging facing manufacturing operations today?
In this report, we look at how to respond to urgent new challenges that have come about due to the coronavirus pandemic, such as raw material and component shortages and lengthy shipping delays, as well as how to address ongoing manufacturing challenges that have become more formidable due to Covid.
Address the new logistics, procurement, and inventory control challenges arising from today’s changing global trading environment.
It’s hard to escape the recent news reports that chip shortages have disrupted manufacturing operations at major auto companies, forcing many to shut down production lines entirely.
But as we all know, while chip shortages have been getting all the headlines, widespread shortages are affecting manufacturers across the board, from sourcing raw materials and components to difficulties in booking transportation to bring goods to market.
Economists probably aren’t exaggerating when they compare the current worldwide economic conditions with those of the immediate post-WW II demobilization period when manufacturers also faced debilitating material and labor shortages, price inflation, and transportation logistics challenges as they resumed producing consumer goods after years of supplying war materiel for the allied forces.
(Hopefully, this time, however, we won’t have to resort to the raw material rationing and price controls instituted by the Truman administration after WW II.)
So what can be done today?
We’ll break the problem into short-term and longer-term issues.
Over the short term, manufacturing supply chain and logistics managers may need to:
- Quickly identify and engage with multiple supply sources for materials or components that are in short supply.
- Where possible, change up production lines to substitute more readily available raw material alternatives or components/part designs available from new suppliers.
- In extreme cases, it may be necessary to ship products to end-users without some accessory parts included (which could be delivered and installed after initial delivery).
- Double down on reducing material waste in production (see next section for more ideas on this).
- Consider working with regional shipping companies if national transportation companies, freight forwarders, etc. cannot meet your deadline requirements.
- Merge smaller LTL shipments into full truckloads (FTL) when purchasing raw materials or components or shipping your products to market.
- Consider partnering with other local manufacturers to consolidate FTL shipments if you cannot meet FTL minimums on your own.
- Use more expensive shipping methods, such as air cargo, if no alternatives exist.
Over the long term, manufacturing supply chain and logistics managers may want to investigate:
- Move offshore manufacturing operations back to the US or engage with US-based suppliers.
- Cultivate deeper relationships with local suppliers to ensure a long-term stable source of raw materials, parts, and components.
- Redesign products and production methods to support efficient switchover to use different raw materials or part components from different suppliers to reduce the procurement risk of being dependent on single sources – or fragile overseas supply chains (more on product re-engineering later).
- Increase the on-hand inventory of at-risk parts and materials, such as computer chips, to avoid production shutdowns (more on this topic in the next section).
- If transport issues continue, consider setting an in-house shipping operation or virtual network of transport operators.
Apply the lessons of Japanese manufacturing to make your facility safer and more efficient
Perhaps you’ve been reading news headlines in the popular press that one of the foundational tenets of the Toyota Production System – Just in Time (JIT) inventory control – is dead, thanks to Covid.
What’s the basis for this claim?
Like many sensational headlines, there is a kernel of truth in it. To date, Toyota has avoided the worst effects of the current microchip shortages by stocking up on chips to create a four-month inventory buffer that’s helped them evade the devastating production shutdowns that have plagued their competitors, such as GM and Ford.
No, not at all.
A closer read of the situation reveals that the Toyota parts procurement teams acted prudently by stocking up, some say as a defensive “lessons learned” response to the supply chain shortages caused by the magnitude-9.0 Great Sendai Earthquake and tsunami that took place ten years ago.
In our view, rather than dismiss JIT and the other production innovations introduced by Toyota, now is the time to revisit and embrace them.
If you need a quick refresher, here are the key 5S elements:
- 整理 Seiri (Sort)
Decide what you need to get the job done and remove the rest by disposing of it or putting it in storage.
- 整頓 Seiton (Streamline)
Organize your workspace and tools in a way that each task can flow smoothly into the next one.
- 清潔 Seiso (Shine)
Keep your workspace and tools tidy and neat.
- 清潔 Seiketsu (Standardize)
Make uniform procedures for your tasks. This helps others to step in and help when needed or simplifies shift work changeovers.
- 躾 Shitsuke (Strive)
Try hard to complete these tasks each day.
Why is now the perfect time to create or re-engage with a 5S program at your manufacturing facility?
Here are five good reasons:
1. Minimize Material Wastage
In a time of raw material and parts shortages, make the most of your existing inventories by uncovering hidden inventory supplies that have built up in warehouses and storage areas.
2. Facilitate Adding Suppliers
Use 5S methods to keep track of material and parts inventories by keeping everything visible and close to hand; this is especially important when adding new vendors/suppliers in the post-pandemic period.
3. Make Good Use of Downtime
If raw materials, parts/components, or labor shortages force you to shut down production, use the time wisely to organize your facility by following 5S principles.
4. Indoctrinate New Workers on Best Practices
Many manufacturing facilities are replacing workers who do not plan to return after the pandemic. A 5S program can help these new hires learn best practices for keeping the work facility clean and organized for maximum efficiency.
5. Work Safer to Avoid Accidents
A clean, efficient facility is also a safer facility. Following 5S principles to keep everything organized – from tools stored in their proper places to clear, well-marked walkways — not only helps you work more productively but also helps reduce on-the-job accidents.
Go on a reduction plan: Reduce part count, reduce weight, reduce material costs, reduce assembly errors, and reduce warranty costs
New materials and manufacturing technologies are making it possible to rethink the design of parts and assembly methods, which can help you:
- Reduce raw material costs by substituting more economical (or available) materials (such as durable carbon fiber impregnated plastics), parts from alternate suppliers, or new production methods, such as additive manufacturing (e.g. 3D printing)
- Reduce raw material and inventory carrying costs by combining multiple parts into one
- Reduce weight and/or product dimensions to achieve lower shipping costs
- Reduce assembly errors (and the cost of returns/warranty claims) by designing parts for easy manufacturing, such as utilizing a top-down assembly strategy
- Reduce or even eliminate failure-prone fasteners where possible by implementing secure snap fits, slotted part assemblies, using industrial adhesive joints, or other innovative assembly methods.
That’s all good advice, but how do you learn to put it into practice?
The eponymous founder, Sandy Munro, made a name for his consulting company by tearing down and costing out manufactured products, from automobiles to aerospace, to consumer electronics products.
After a recent teardown of a new VW ID.4 electric battery tray, Munro assembled a team of product and manufacturing engineers to brainstorm on how to recreate this complex component using far fewer individual parts and fasteners by creating a new replacement design out of high strength carbon fiber impregnated resin – the result was a whopping 50% plus weight reduction, as documented in this detailed video above.
Take control of the production process and respond faster to changing customer demand
So far, we’ve brought up the need for increased flexibility in manufacturing – for example, the ability to switch to different raw materials when the ones you normally use are in short supply or procuring parts and component designs that are more readily available from a new supplier.
For many large mass manufacturing operations, however, changing the factory production process on short notice is easier said than done.
Yet despite the challenges, many large scale manufacturing companies are pursuing the ‘holy grail’ of trying to combine the advantages of short production runs (e.g. the ability to sell profitable, custom products that satisfy new consumer demand trends or switch to more readily available raw materials and components) with the cost and efficiency advantages of less flexible high-volume production lines.
The flexible approach, which often goes by the name Flexible Manufacturing System (FMS), takes advantage of modern manufacturing technologies, such as CAD/CAM systems that drive automated tools (such as CNC machines or additive manufacturing systems), which can produce short runs of customized products as well as incorporate robotic systems that can quickly adapt to assembling different components as needed.
If implemented successfully, FMS can help improve profitability in several ways:
- Bring new products to market faster, when sales margins are highest and demand is strongest
- Reduce raw material and parts procurement costs by switching to lower-cost suppliers or ones with greater availability (an important consideration in today’s supply chain)
- Increase margins by selling unique premium products that meet current customer demand (and are differentiated from competitor’s products)
- Fulfill “long-tail” customer demand for products by producing short production runs as needed (without having to stock large production runs on a warehouse shelf for years at a time)
What’s the best way to implement an FMS system?
Perhaps the first step is to rationalize your product designs to make them more modular, and thus, more readily customizable.
The next step is to build a working prototype of a flexible short-run production line to gain hands-on experience on what approach works best and make continuous improvements to improve efficiency and productivity.
This is where Formaspace can help.
We can build modular production line components that can help you prototype and then refine your new flexible manufacturing lines – allowing you to incorporate new flexible automation technologies working in partnership with your skilled manufacturing workers.
Invest in strong Product Management and Industrial Design to innovate profitable “must-have” products
Ask any sales team about what kind of product (or service) they’d like to sell, and the conversation will eventually touch on those “it” products that seem to sell themselves, the ones that seem to be in the right place at the right time.
Where do these high-demand products come from? Is it just plain luck?
While luck certainly helps, many of the world’s top-selling products are the result of long hours of planning, starting with product managers identifying a hole in the market (based on a deep understanding of consumer trends) and coming up with a unique solution, and then championing the idea within the organization to bring it to market at just the right time.
How do product managers and industrial designers identity new trends and capitalize on them before the competition?
Here are some key tips:
- Maintain situational awareness of upcoming once-in-a-generation ‘mega trends’ that dramatically change the market landscape
In many consumer products, the current megatrend is leading with a digital-first software platform, while in transportation and energy production, it’s the massive transition from fossil fuel power to renewable energy sources. In office furniture, Work From Home (WFH) is creating new opportunities for furniture design.
- Track current trends in consumer demand within your target demographic
Conduct customer focus groups and sales channel roundtables to identify new trends and capitalize on them before the competition, always asking, “would you buy this?”
- Experiment with short custom production runs and crowd-sourced design input
Social media offers massive new opportunities to offer custom products to appreciative customers, as well as solicit ideas for new products directly from customers.
Attract top talent by transforming your facility into an attractive workplace
Domestic manufacturing companies were facing labor sourcing challenges long before Coronavirus, so it’s not surprising that recruiting new hires continues to be a major issue in manufacturing in the post-pandemic period.What is new is that economists have noted many older workers who were laid off during the height of the lockdown are electing to retire early rather than return to work – and surveys indicate that workers of all ages are considering leaving their current employment for new opportunities as things “return back to normal.”
What does this mean for manufacturing companies?
There are several points to consider:
- With prospects for lower unemployment numbers on the horizon (as the economy comes back to life), manufacturing companies seeking new employees will have to work hard to overcome their reputation as a “dirty and noisy” place to work.
- Existing factory workers may be more circumspect about the idea of where they work and how safe and secure they feel on the job. Manufacturers will need to make facilities cleaner and more sanitary to retain existing employees.
- Recruiting highly skilled workers, such as product engineers, software programmers, IT specialists, etc. will remain an ongoing challenge, as these highly sought-after candidates may overlook manufacturing careers. Recruiters will need to demonstrate that modern factories are clean and high-tech, offer competitive compensation, and a rewarding career.
What steps can manufacturing companies take to recruit and retain workers?
Use attractive offices and comfortable, safe workstations as a recruiting tool.
Many of today’s young technical students are graduating from programs at colleges and universities where well-designed, modern facilities (including classrooms, libraries, laboratories, and maker spaces) are the norm. Many of them want to work in a similar environment when starting their careers, so creating a modern, inviting work environment will give you a leg up on the competition when recruiting.
Recruit workers who may not be considering a manufacturing career
Today’s modern manufacturing is increasingly high-tech, yet many STEM students, particularly women, tend to overlook opportunities for a future career in manufacturing. It’s crucial to reach out to potential recruits through apprenticeships and mentoring programs at a time when they are making career decisions to open their eyes to a rewarding career in manufacturing. Likewise, it’s equally important to ensure the workplace welcomes a diverse workforce and that every employee feels like they are an equal member of the team.
Formaspace is Your Partner for Efficient, Safe, and Productive Manufacturing Operations
If you can imagine it, we can build it, here at our factory headquarters in Austin, Texas.
It’s time to find out how Formaspace can partner with you to make your manufacturing, material handling, and warehousing/distribution centers more productive and efficient.
Find out why our clients, including Apple, Dell Computer, Google, Oculus, SpaceX, and Toyota, choose Formaspace industrial furniture products for their facilities.