As we find our way through the volatile present, manufacturers are making more long-shadow decisions than ever—often without the benefit of updated, fact-based assumptions. Shifting factors are reshaping demand and resources on a daily basis, and the pre-COVID playbook no longer applies. If your goal is to survive the recession and emerge stronger and wiser, you need a playbook on how to proceed.
But how do you forge ahead with certainty in a world that’s anything but? To best determine where we go from here, let’s review where we are and what we indisputably know to be true.
Even before COVID-19, long-held industry assumptions—regarding demand, supply chain, and the workforce—were unraveling. Today, the manufacturing industry is in a state of flux. For example:
At the onset of an economic downturn, it’s almost reflexive for companies to shift into survival mode—cutting spending, halting R&D, engaging in layoffs. While it’s understandable, evidence suggests that it’s not helpful. Rather, companies that continue to move forward during recessions emerge in considerably stronger positions.
Case in point: researchers from Harvard Business School studied the behavior and outcomes of more than 4,500 companies during a trio of prior slowdowns: 1980-1982, 1990-1991, and 2000-2002. They tracked each company for nine years (three years before, after, and during the recession.) These were their key findings:
How can manufacturers apply this information?
Considering what we know, it’s logical to conclude that your next move should be based on these four tenets:
Now is the time to squeeze the most from existing resources. With depressed demand and margins, operational efficiency is key to survival. This means quickly identifying specific areas of waste and eliminating their root causes, while ensuring high OEE to maintain margin integrity.
Now is the time to push performance and execution through accountability, automation and a full-out war on waste. To do so, you must be able to track the metrics that allow you hold your team accountable and identify the root causes of your problems.
As demand finds its way to the plant floor and the bullwhip-effect is in full force, investing in resources like inventory, workforce, equipment and operating capital require a meticulous, data-based approach. There is little room here for gut decisions. Use a scientific process to justify new resources and investments.
Lean into the uncertainty. Keep asking questions and watching as your hypotheses play out through data. How do you do that? The A3 problem-solving process is a powerful lean manufacturing tool that offers an easy, consistent approach to problem solving.
Operating within a shifting world order—such as materials availability and a newly-structured workforce—requires swift learning cycles. Not only do you need to quickly ascertain what works and what doesn’t, you need to document your findings for your future workforce. Don’t operate ad-hoc or rely on tribal memory; develop a system for documenting what works and doesn’t.
Remember, volatility creates opportunity. Use the disruption to pounce on rare opportunities that present themselves, such as:
While there is no silver bullet in a 2020 manufacturing playbook — for proactive manufacturers, the market is there for the taking by maximizing existing resources. It starts by connecting with the reality of your business through accurate data, and implementing a scientific improvement system. From achieving OEE to doing more with less, Amper can help you get started. Let us show you how.