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Manufacturing organizations bear the brunt of global competition. Whether your plant operations consist primarily of discrete, repetitive, build-to-order, continuous process, or mixed-mode models, competitive pressures and increasing customer demands are driving most manufacturers to produce goods ever faster, at lower cost, and in compliance with more exacting quality, regulatory, and market requirements.
As both cycle times and margins shrink, profitability can be achieved only by:
- Reducing costs and lead times through strategies such as outsourced manufacturing, lean or demand-driven manufacturing initiatives, postponement, and shared services.
- Meeting customer demands for shorter lead times, greater traceability, custom configuration or packaging, and compliance initiatives such as radio frequency identification (RFID).
- Bringing new products to market faster.
- Offering advanced services such as vendor-managed inventory (VMI), returns management, or warranty and repair services.
This white paper outlines ways that technology can help manufacturers meet these challenges, increase operational efficiency, and step ahead of competitors with more proactive planning, greater shared visibility, and more agile and more profitable responses to change. This white paper will also address specific ways that Microsoft Dynamics? AX can help your manufacturing operations compete, grow, and succeed.
Manufacturing Trends and Key Challenges
A variety of trends currently influence the market environments facing most manufacturers and the managers of plant operations today:
- Global business, including more cost-efficient competitors. - Increasing customer demands and expectations. - An accelerating race to introduce new products and technologies. - Outsourced manufacturing. - Increasing regulatory, industry, and customer-compliance requirements.
These trends, alone and in combination, create significant challenges to profitability.
Key challenge: price pressure
Low-wage competitors in developing countries have radically altered traditional manufacturer and customer relationships. Meanwhile, technology is eroding traditional geographic constraints, so for many buyers, price becomes everything. Pricing pressures have driven many manufacturers to reduce inventories, automate more processes, and outsource design and/or manufacturing. These strategies and standardization - the implementation of common and shared business processes and systems-are effective approaches to controlling both costs and quality, but they bring their own coordination challenges.
In this buyer's market, expectations for quality, customization, and delivery speed have never been higher, and most companies or supply networks cannot compete on the basis of price alone. To remain profitable, manufacturers must effectively demonstrate their overall value to customers with service and support such as one-stop shopping, value-added service operations, end-to-end materials tracking, compliance documentation, and customer self-service. Such market differentiators can help ensure long-term success even in a price-pressure environment, but only if they are managed profitably.
Key challenge: agility
In this competitive business climate, the pace of innovation and change becomes increasingly important. Even the leanest manufacturers need to continually adapt both products and processes to:
- Reduce waste, improve cycle times, and enhance quality. - Take advantage of new technologies. - Meet customer demands for tailored products and services.
- Juggle an increasingly complex product line with products and packaging modified for the diverse cultures, consumers, languages, and expectations of global markets.
To keep pace, manufacturers must respond with more nimble design and engineering, faster quotations and new product launches, greater flexibility in handling order changes, and faster replication of best processes. Knowledge must be easily accessible to sales and plant floor employees as well as the managers of outsourced manufacturing or assembly operations. In the event of an unscheduled production delay, for instance, representatives in materials management, logistics, and order management need to be alerted with access to real-time visibility into the causes of the delay and its ramifications. Effective coordination takes on paramount importance. Yet quick responses and effective decisions can be stymied by inadequate information flow between self-contained departments, plants in a division, or outsourced manufacturing operations.
Key challenge: insight
Accurate information and the ability to respond with fast, informed decisions are key requisites for agile, low-cost manufacturing. Unfortunately, many manufacturers continue to operate with aging and unconnected information systems. Growth through acquisition, plus the valid need for custom manufacturing processes, often results in an inability to gather and roll up data from diverse manufacturing execution and control systems. Consequently, many manufacturing organizations struggle with insight issues such as:
- Critical machine, performance, tracking, and status information trapped in silos.
- Limited visibility of manufacturing data in the context of overall enterprise processes and information.
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