Car manufacturers rolling ventilators off the line. Breweries pumping out hand sanitizer. Laundry and uniform businesses outfitting healthcare workers with PPE. If there’s anything I’ve learned tracking companies through their COVID-19 pivots, it’s this: success means being agile. On one hand, agility supports a good cause, making a real difference in the fight against the pandemic. On the other hand, agility is good business. Companies that are flexible and nimble enough to meet shifting demand are thriving – not just surviving.
So how do you build agility into your business?
Here are 8 things I’d like to share from companies doing it right.
1. The product development process is streamlined
Before a new product reaches production, it needs to run the gauntlet from initial vision through R&D, engineering, purchasing, and sales and marketing. I’ve come across so many companies that don’t connect these different areas when creating new products, resulting in inefficiencies, mistakes, and people just “winging it”. Building agility into your business means doing just the opposite: establish processes that open communication between everyone down the line, and make sure they’re repeatable each time you roll out a new product.
2. Data movement is managed through software integration
I hear this a lot: “My best (and expensive!) engineers spend hours every week manually re-entering data between systems.” Getting data from CAD systems (Computer-Aided Design) into an ERP system is a big pain point. Not only could those engineers put wasted hours to better use, but manual data entry runs the risk of human error. Imagine if an incorrect bill of materials resulted in purchasing the wrong materials, or manufacturing the product incorrectly. To be more agile and efficient, your company needs to choose integrated software systems that eliminate manual work, reducing risk, and freeing up your most limited resource: time.
3. Alternate routing is planned and digitally stored
Sometimes pivoting can mean making mostly the same product, but with some variations, such as a different way of manufacturing it in the plant, and/or using different materials (for example due to unexpected supply chain shortages, such as packaging). These different ways are also known as routings. If many versions of how to make a product are floating around, it is difficult to manage and can result in errors and wasted time and materials. Agility comes from having the ability to digitally store multiple routings and use them to drive purchasing and production.
4. Demand forecasting is data-driven
Forecasting goes beyond setting sales quotas. Without an estimate of the sales demand, downstream departments such as purchasing and production are flying blind and operating by guesswork. This also generates animosity between Sales and Operations – this is practically a cliché. But generating forecasts is often tedious work and based on gut feel rather than data. Agility comes from the ability to automatically analyze sales, create solid forecasts as a single source of truth, and flow these downstream to purchasing and production.
5. Actual costs are known
Here’s the worst surprise of all: you gear up to make a new product, only to realize unexpectedly that you aren’t making the profit you anticipated – or worse yet, you’re losing money. Costing isn’t just an exercise in tallying up material costs. To be agile, you need the ability to track and quickly calculate all of your costs, from raw materials and the cost of sourcing them to labor and equipment, so you don’t encounter unpleasant surprises later on.
6. The Purchasing department is involved early on
The gap between what’s planned and what’s implemented is something I see in many businesses – and bridging it can make all the difference in staying nimble. Let’s say you’re pivoting to manufacture ventilators. If no one tells purchasing that they now need to order 50,000 hoses, production simply can’t move forward. That’s why it’s so important that purchasing has visibility of what to order, and when, and source new suppliers if necessary. Once more, it all comes back to having the right processes and integrated systems in place – upstream visibility ensures downstream efficiency. Here is an eBook that provides you a number of strategies to effectively manage procurement.
7. Production and capacity are planned in a data-driven way
Agile companies don’t make promises before knowing they can deliver. That means figuring out the load that new production adds to your plant. Will you need more overtime? A second shift? New machines? A shift in existing resources? Will you outsource work? You can answer these questions, and avoid constant firefighting if you have clear visibility of the predicted load on your plant. To achieve this agility you need a system to collect and analyze both upstream data such as sales demand, and operational data such as machine capacities and bottlenecks.
8. Returns are tracked and digitally accounted for
We often think about how we ship products to customers. What about how customers send products back? Along with COVID-19 came a surge of returns as customers found themselves canceling orders or returning purchases they already made. Manufacturers struggled without automated systems in place to manage the entire returns process, including authorizing returns, issuing credit notes, and tracking returned inventory. Often, handling returns is an afterthought with no visibility of the true hidden costs. The most successful companies were those that replaced manual systems with digital ones.
Where do we go from here?
I wish I could tell you that becoming agile is as easy as installing some software. But as a longtime “manufacturing and supply chain guy”, I can tell you first-hand that it doesn’t happen overnight – there’s a lot of work involved.
And even though I work at a software company, my advice isn’t to install more software. Quite the opposite: start with your processes. R&D, engineering, sales, marketing, purchasing, production – everyone needs a clear path where communication, knowledge, and data can flow within and between teams. If the right-hand doesn’t know what the left is doing, finding a solution is a priority.
The impact we’ve seen from COVID-19 on manufacturing speaks to a final lesson that reaches beyond the current pandemic: embracing change itself is how we survive. So use this opportunity to shore up your processes, and ask yourself those hard questions about how you can respond to shifting demand. After all, we don’t know what the new normal will be… we only know it won’t be the old one.