Written by René Hol
The January 6, 2020 New Years blog describes interesting developments and opportunities for 2020 and beyond. But for manufacturing company’s leadership to guide your company through these transitions is a complex task. A big dilemma for top management is where to start, with what, with whom and when. This blog provides some practical advice to demonstrate you are able to convert your vision into action.
How leadership can take their responsibility
As said before, leadership should overcome their fear to roll out a room-wide carpet to lift up their company to the next level in the digital era. We don’t promote long-lasting, risky and complex projects, but a coherent set of rightly scheduled initiatives. How to deal with this? Of course, here is not just one straightforward answer. However, below we propose two realization agendas for two manufacturer’s profiles where we see interesting trends emerging. A different agenda is proposed for (1) companies with an own complex product and (2) firms-subcontractors that produce on customer specifications. The agendas will frame all initiatives and investments logically, and include most relevant elements of process, people & organization, IT-systems and manufacturing infrastructure. The agenda acts like a framework and various methodology templates are available.
Leadership agenda in companies with own product
Many own product companies are mid-sized. Their competitive advantage is a strong customer focus. The yield is the capability to create a unique product for the customer. The business typology is labelled as EtO (Engineer-to-Order). This business model has some disadvantages. Product’s costs of goods are quite high, the business is not very profitable, lead times are long and there is much space in the market left for cheaper new entrances. The dilemma is the current way of acting does not provide the basis for serious growth, so the company is very vulnerable. These companies should strongly consider a move to a business model based on a configurable product. This transition is often earmarked as ‘from EtO to CtO (Configure-to-Order). Standardization of technology and modularization of the product are core elements. It provides unique opportunities to introduce (1) disruptive new – web based – sales models, (2) quicker product innovation processes, (3) prototyping with additive manufacturing technologies, (4) streamlined manufacturing with short lead times and last but not least (5) servitization.
Leadership agenda in subcontracting firms
The subcontracting industry does not have its own product but needs to deal with – product – specifications of their customers. Subcontractors have the challenge to rise in the value chain of their customers; to intensify the relationship with the OEM-ers. Easily said, but it needs vision, courage and strong leadership of top management during realization. Central concept is program management based on thinking and acting in strategic partnerships. With a selected group of customers, the subcontractor should establish and offer new competences embedded in customer focused processes. The most important aspects during implementation are (1) co-engineering capabilities and IT-systems to manage product data of a portfolio of products of different customers, (2) supply chain planning and (3) product-order mix flexibility in manufacturing and MES-systems.
Call for top management action; don’t solely rely on the project plans
For 2020 many initiatives have already been planned as a result of budgeting and planning cycles at the end of 2019. A continuous monitoring is in place to check if the aimed initiatives are moving forward. Probably action owners have been assigned. Most developments will impact people’s daily work. The consequence is a continuous pressure to create “energy sources” in your line organization to accept, carry on and realize the change. These power bubbles cannot be delivered solely from the traditional project organization – they should focus on the technical implementation. As top management, you need to fold out and monitor the change and mobilize the line organization to make a successful transition.Back to archive