3 Bold Trends to Watch
Arena regularly publishes insights and analysis on important trends impacting manufacturing. Is there an emerging business technology development you deem important or want us to cover? Comment on our blog.
Advanced Manufacturing to the Rescue
Manufacturing in America is facing a gap between an aging workforce, an economic recession, increasingly strict regulations, and a need to attract a new generation of more innovative manufacturing minds.
What’s the solution to this conundrum? Perhaps, it’s ‘Advanced Manufacturing’.
Advanced Manufacturing is described as “a family of activities that (a) depend on the use and coordination of information, automation, computation, software, sensing, and networking, and/or (b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences, for example, nanotechnology, chemistry, and biology. This involves both new ways to manufacture existing products, and especially the manufacture of new products emerging from new advanced technologies.”
The Wall Street Journal described Advanced Manufacturing as “A Revolution in the Making” with the byline “Advanced Manufacturing technology is transforming manufacturing, making it leaner and smarter—and raising the prospect of an American industrial revival.”
Points to Ponder: Advanced Manufacturing will increase efficiency, making manufacturers’ bottom lines fatter. In addition, jobs with repetitive tasks will be replaced by robotics causing jobs that do open up to require more advanced education.
CFOs Take More Active Role In Software Purchases
CFOs naturally see clear ROI paths when it comes to financial systems, such as enterprise resource planning (ERP), but product lifecycle management (PLM) is a bit more opaque and another matter altogether. At its core, PLM is a system of record for your product data with huge value not normally measured in a balance sheet. It crosses all functional lines in its influence and consequences.
Simply put: CFOs routinely see how inventory translates to dollars in an ERP system, but historically have not always considered how product quality and time to market delve into the very fiber of all cross-functional areas and can translate into tremendous cost savings.
Today, strategic-minded CFOs are now asking such questions as, “What dominant new product introduction (NPI) challenges are restricting business growth, and what manufacturing tools can help overcome these obstacles?” or “What emerging supply chain business trends risk impeding our success and how can finance help out?”
According to a recent quarterly report by Deloitte, “As companies continue to adapt to volatility while boosting their pursuit of growth, CFOs are gaining an increased role in strategy.” The study concluded that CFOs now claim to have strategic input in which industries their companies should enter/exit (78%) and what businesses to grow/shrink (73%). The report also discovered that CFOs are most likely to spearhead decisions for which businesses to acquire/divest (41%) and how to create value (40%).
So what do all of these statistics add up to?
Points to ponder: There’s an increasing trend for CFOs, especially at small to midsize manufacturers, to vet—daresay—drive technology investments. The role of CFOs at manufacturers and innovative product companies has quickly evolved from “bean counter” to strategist to powerful change agent.
More Outsourcing Means More Problems
New manufacturing paradigms, such as outsourcing, globally dispersed supply chain teams, regulatory tentacles, workflow software, and the importance of collaboration, have turned the world into a global market. And while these business models have leveled the playing field in terms of commerce, streamlined manufacturing processes, and reduced costs, they have also introduced a host of new vulnerabilities and pain points that impact all OEMs.
When OEMs outsource their manufacturing, they outsource their material planning, leaving them blind to the total quantity of parts they’ll buy over the next year. Because of this, more OEMs realize that outsourcing has either cost them negotiation opportunities—or, at a minimum, they’re leaving beaucoup money on the table.
For example, a single seemingly insignificant capacitor used in multiple quantities across different products rarely has its total portfolio-wide aggregated usage accounted for when purchasing is forecasting part buying decisions. Knowing the total aggregated usage of the capacitor in advance provides the customer with significant leverage to negotiate volume and price with their supply chain partner.
Points to Ponder: More companies will begin using material demand solutions, especially those that are embedded in and integrate into a PLM solution. These tools will better calculate exact material demands for components or subassemblies based on manufacturing projections to gain heightened visibility and greatly improve their supplier negotiations.