Be ready when opportunity knocks: 5 steps manufacturers can take to prepare for growth
Most manufacturers strive for growth and expansion, looking for opportunities to gain greater market share and see their products succeed. But the truth is, today’s opportunities for expansion often come at unexpected times and in unexpected ways. And if a company is not well-equipped with the organizational, product development and manufacturing processes to capitalize on them, those opportunities can go just as quickly as they come.
How can you be ready to answer when opportunity knocks? Start preparing now. When we look at our customers who’ve successfully capitalized on opportunities for growth, what we see are companies that think about what it takes to scale and ready themselves even before the need arises.
Step 1: Know your products
If you’re a manufacturer, your product is the core of your business. Most manufacturers are used to thinking of their products holistically (i.e. as a complete final product) but it’s just as important to think about the collection of individual parts that come together to create those products. Thus, having control over part data is vital to your products’ success.
Know your parts
To establish control, you must first know your master parts list, which should encompass all the details you need to order, build, receive and qualify your parts. Creating a centralized system that manages this information is helpful, especially when the information has to be shared across many departments of your company. Arena offers four tips on how to establish control over your master parts list:
- Remove duplicate part numbers
- Reduce the noise of inactive parts
- Document your parts well
- Find alternatives and multiple sources
Know your BOMs
Aside from knowing your master parts list, you must also understand your product bill of materials (BOM), the DNA of your product. It shows how each part is associated to the whole and how all the parts work together. Revisions and changes in parts and specifications are inevitable during the product development process, and your BOM needs to reflect these changes. It can be chaotic without full control over the information in your BOM. An accurate, up-to-date BOM, on the other hand, minimizes miscommunication and misinformation. To establish control over your product bill of materials, you must:
- Control product revisions
- Track product compliance
- Locate cross-product commonalities
- Identify substitute parts
These steps are described in more detail in the article (and yes, full disclosure, Arena does offer software that helps manufacturers centralize their product data and capture complete BOMs).
Know your key components
The last part of knowing your product is knowing your key components, so you can proactively find solutions before an issue brings down your line. To identify the parts that represent significant risks to production, manufacturers should closely monitor long lead times, expensive components or assemblies and single sources.
Step 2: Know your supply chain
Although control over every phase of your manufacturing process might seem ideal, the truth is that it simply isn’t an option for most businesses. Instead, most manufacturers rely on a network of partners and suppliers to get their products designed and manufactured. For your supply chain to be efficient and stable, it is important to know the status of your partners and suppliers, as well as the state of your relationships with them.
- Check your sources. Periodically checking in with your suppliers and partners minimizes the miscommunication that can lead to problems in the later manufacturing phases. Checking in also helps ensure that everyone is working with clean, accurate information and that no changes or revisions go unnoticed. Keeping a close eye on component lifecycles, custom part manufacturers and supply stability will also help you evaluate whether a potential supply chain setback will be a major or minor one.
- Evaluate your sourcing relationships. The better your relationship is with your partners, the more likely they’ll make choices that help you both succeed. Good relationships establish open communication paths, mutual understanding and respect. The Arena article advises companies to have detailed contracts with their key suppliers and CMs are in place and also to regularly evaluate the performance and relationships of their vendors.
Step 3: Know your processes
Manufacturers know that it takes systematic and sometimes complex processes to build a good working product. Evaluate your process documentation, yields and rework and repeatable processes to make sure your assembly process is efficient, clear-cut and ready to grow.
Step 4: Know your business
The success of your product is determined by more than just the outcome of the assembly process; it also requires support from the rest of your organization.
To determine if your company is ready to get your product into the hands of customers:
- Evaluate full product impact. The article describes it as thinking through both “what-if” and “and-then” scenarios, in other words considering what would need to change in order to grow and how those changes would affect your business. Doing so will help you be ready to scale your organization, adapt to changes, confront any problems quickly and effectively and balance different stakeholders’ needs.
- Know your financial health. Understanding your cash flow situation can help you make better decisions about when to spend or invest. Don’t hesitate to consult a professional to help you explore your financial options and think through when and how to expand. It’s also important to know your company’s contractual commitments with suppliers so you can be ready to renegotiate or seek out alternative options if an obstacle arises.
Step 5: Look for opportunities
Once you’re better prepared for growth, you can more successfully plan for the future. Be on the defense: identify risks and be ready to respond to changes quickly and effectively. But don’t be afraid to play offense: look for business opportunities and follow up on them when possible. With proactive planning, you’ll be prepared to capitalize on market opportunities, even when they’re most unexpected.