Around the globe, small and medium scale product manufacturers are struggling to cope up with the digital transformation, accelerated by breakthrough technologies such as CAD/CAM/CAE, robotics, 3D printing, etc.
It is in the interest of SMEs then, to adapt to these rapid changes and redefine their industrial processes, if they do not wish to be left behind by their competitors.
Product manufacturing companies need to devise new strategies, change their business models and develop talent that respond to this change, in order to capture growth and survive in a disruptive environment.
Considering present trends in manufacturing sector, three critical strategies can be visualized with a broader perspective, to leverage growth and allow small & medium scale enterprises to survive and stay at par with their competitors: Innovation, Digital Transformation and Globalization.
Fueling innovation in product development and manufacturing processes is critical today for any manufacturer, irrespective of size and capacity. New companies, even with small scale facilities are increasingly bringing new competitive products to disrupt the conventional market through innovation.
However, for traditional manufacturers, innovation itself isn’t really the solution. The technology and resource constraints keep conventional firms struggling to drive innovation. They are required to continually adapt market shifts and trends, in order for innovation to work in their favor.
A good example of this is the recent adoption of modular system approach called “Common Module Family”, by Renault-Nissan Alliance to build dozens of different, distinct vehicles using common parts. This frugal engineering approach as termed by Carlos Ghosn, the Chairman and CEO at Renault-Nissan Alliance, is not only restricted for vehicles, but is also extended to assembly plants as well.
“By sharing the major components among a wider variety of models, we have substantially simplified our engineering and manufacturing processes. We expect CMF to reduce our investment costs by up to 40 percent and our purchasing costs by as much as 30 percent”, said Ghosn in his recent post on frugal engineering approach.
As he rightly says that the global auto industry is a business where scale is critical, this innovative approach has helped his company to gain competitive advantage without looking to develop new assembly plants.
The savings gained in turn, allows the company to provide additional features for its customers. Thus, the actual imperative for such companies is to have the ability to respond to change, which in itself is a part of innovation.
An important strategy that might sound old for best-in-class manufacturers is the digital transformation of product development processes. The fast moving digital design culture is easily allowing new entrants to disrupt the conventional market, purely due to their early adoption of right technology tools.
They are even able to deliver products on time for the market, as compared to traditional counterparts, and that too at a competitive price.
The digital transformation of industrial activities is increasing competitiveness and opening new ways to integrate customer needs with the product development processes. However, Deloitte’s perspective on digital transformation reveals that only one-third of the companies have IT infrastructures in place to switch to digital industry.
About half of the companies believe that their infrastructure is still not completely suitable for the digital revolution. It is high time now that manufacturers need to realize the importance of digital tools, and business impact that they might experience when neglecting them.
Our recent article on digital transformation through CAD, draws attention on why manufacturers need to respond immediately, to convert their design information to CAD drawings before it gets too late.
The need to keep design safe and flexible for future changes, along with shifting global standards across the manufacturing sector requires manufacturing firms to adopt more advanced CAD tools, and get rid of traditional designing approaches and remain competitive.
Digital transformation as such remains a vital growth strategy for SMEs to keep pace with the changing market landscape. Earning success in a digital manufacturing era requires certain necessary steps to be taken, which may include transforming the design development process entirely, or shifting from 2D to 3D CAD tools, utilizing virtual testing tools and additive manufacturing tools to reduce physical test trials and associated costs.
In the face of such disruption, one of the key growth accelerators is utilizing right people through globalization. People are the key, as they make innovations, and having right people on-board is vital for manufacturers to succeed.
In a global economy, distributing product design and development efforts to global geographies is a widespread phenomenon, and is being increasingly exploited by best-in-class manufacturers to keep their product development process economical, while also benefiting from the access to global talent pool.
While it does add a layer of complexity in development processes, cost optimization and capacity & capability augmentation outweighs the benefits of conservative approach for developing everything in-house.
Globalization brings along number of benefits, much needed to keep SMEs competing in the fast changing market. With a strategic outsourcing partner, product development costs can be minimized dramatically and development time can be minimized to bring products to the market faster.
Since investing in expensive technology and resources may disturb the product cost, shedding out design activities overseas compensates the cost constraints while also leverages existing capabilities without investment. Globalizing supply chain network however doesn’t happen overnight, there are number of barriers to overcome in order to become an extended enterprise successfully.
In today’s fast changing product manufacturing market, these three strategies must remain vital and core to small and medium scale enterprises, if they need to succeed and stay competitive in the market that is increasingly influenced by technology.
Filed Under: Industrial automation