Demand-driven manufacturing

Posted on 17 May 2011 by The Manufacturer

Ruben Gil, director business consulting EMEA at AspenTech, looks at driving business agility through process optimisation.

Over the last few years of economic turbulence, process manufacturing has faced continual pressures to improve operational performance and adapt to changing demands in order to remain competitive. With the increasing complexity of managing business operations today, standardisation of enterprise technology, greater visibility of processes and improving value in the supply chain are just a few of the priorities required to successfully achieve commercial goals.

In 2010, one of the world’s leading technology research and advisory company, Gartner, conducted and published a study into manufacturing business and IT trends in North America and Europe across a demand-driven value network. The study, which covers 313 companies across the region, identified a raft of challenges that manufacturers need to address if they are to be successful in meeting key objectives, such as “optimising performance and utilisation of existing assets”, managing “supplier quality, compliance and performance”.

The report emphasises that “increasing value chain complexity, compliance mandates and innovation goals place pressure on manufacturing” while highlighting the fact that although “visibility across manufacturing operations is paramount to operations excellence” the “trade-offs between enterprise standardisation and local execution must be defined and managed.”

Compounding the problem of growing complexity across the value chain is the question of under investment in manufacturing, which has been a significant issue in the recent downturn and one which has added to an already lengthy backlog of required changes, creating an ever growing list of commercial challenges for manufacturing to achieve.

This issue is exacerbated further by a shortage of skills across the demand-driven manufacturing space. Not only is talent thin, but the blend of skills required to manage this complex environment is great and is outpacing the ability of businesses to recruit and train the right staff.

So, how can demand-driven manufacturers best respond to this complex set of challenges? The Gartner study found that the most important business driver impacting manufacturing companies was innovation (highlighted by 25% of companies surveyed). Innovation is a key driver for industry with more than half of the companies surveyed showing an increase in the number of products and product variants planned in the next 12 months.

Of course, innovation purely for its own sake will not in itself be enough to make manufacturers successful. They need to ensure that such innovation helps to support, business agility and visibility across the manufacturing chain. Ultimately, accomplishing all this will allow demand-driven manufacturers, in particular, to achieve their business goals.

Finding an Answer

So, how can they achieve this? Demand-driven manufacturers are today already investing in technologies to track, provide insight and shape demand, as well as systems and solutions that more effectively orchestrate their supply network. Unfortunately, while most such solutions help align and coordinate the various components of the supply network, they do little to help improve overall manufacturing operations.

Manufacturers should take a more holistic view of the situation and integrate production execution with the supply network in order to ensure production is aligned with customer demand and profitable sales. This, in turn, requires manufacturing processes that consistently and efficiently produce high quality products, rapid formulation of schedules that minimise costs while satisfying the needs of the supply plan and manufacturing operations to execute with excellence as flawlessly and efficiently as possible.

Greater visibility across the whole manufacturing operation will make it easier to respond quicker to issues and help decision making to achieve operational excellence. Implementing best practices for optimising manufacturing and supply chain operations through the use of process software technology will help monitor activity, increase capacity, improve margins, reduce costs and become more efficient. In addition, the speed and flexibility of these software-based systems (or solutions) will provide the ability to rapidly respond to production disruptions, late changes in customer orders and material availability issues, as well as determine the that revised schedules is the route to profitable operation.

Further underlining the importance of the ‘holistic’ approach, manufacturers should prioritise investments that support multisite operations excellence, ongoing development, global visibility and the alignment and integration of manufacturing with demand-driven value network objectives.

In addition, the need to support both the local plant and agile global coordination can be gained by delivering configurable, model-based deployment of distributed business processes for sites to adapt efficiently, enabling them in turn to remain differentiated and to deliver competitive edge.

This kind of agility is vital to success in the highly pressured demand-driven manufacturing arena. Organisations need to profitably deliver what the customer wants, when they want it at a competitive price and show how they achieve this elusive combination.

Manufacturing is a complex business and, therefore, there is the greater need to adjust to the reality of meeting new challenges year-on-year in an ever changing environment. Demand-driven manufacturers need to apply the principles of modernisation, standardisation and control of the manufacturing operations software landscape.

Furthermore, demand-driven manufacturers are also considering building the kind of manufacturing technology capabilities that reflect the needs and opportunities presented by the latest generation of distributed business processes for manufacturers, known as Manufacturing 2.0. However, while cloud and SaaS are both likely to have roles to play in the future, manufacturers are best advised to focus their efforts and extending operational visibility and compliance.

Looking Ahead

Plant operators and management now have the tools to create an optimal plant production schedule and better understand, manage, control and optimise operations to ensure consistent and high quality product at the lowest possible cost thanks to optimisation process technology.

These type of technologies are today in use by the world’s leading process industry companies. Some have been in use for many years and others are more recent innovations that are proving to be highly effective. Integrated solutions provide actionable plant information and intelligence that drive results and ultimately help to optimise plant operations.

In this context, companies like AspenTech’s state-of-the-art software solutions support companies in configuring these kinds of architectures and by standardising on solutions, such as aspenONE Manufacturing and Supply Chain software suite, process manufacturers are able to achieve the results designed to optimise day−to−day processing activities, make better, more profitable decisions and improve plant performance.

So, it is fitting that, as the Gartner report states, manufacturers see optimising performance and utilising existing assets as key current and future goals, while identifying innovation as the most important business driver impacting manufacturing. Major benefits are realised through reduced process variability, improved process efficiency, reduced energy consumption, increased throughput and yields, improved product consistency and quality.

These factors contribute towards manufacturing excellence. Moving forward, companies that are able to improve the performance and profitability of their plants by achieving manufacturing excellence will find themselves primed to take advantage of and thrive in challenging economic circumstances, while also capitalising on market opportunities as they develop due to their highly flexible manufacturing capabilities. This isn’t about what manufacturing industry demands; it’s about demand-driven manufacturing.