Forecasting — although very important in manufacturing — is not a foolproof way to anticipate demand or potential disruptions to production.
One need only observe the effect of the coronavirus on global supply chains to see this principle playing out in real-time. Many healthcare organizations have experienced serious shortages of personal protective equipment (PPE) as a result of the spike in demand, while consumers have seen retail shelves devoid of many otherwise commonplace products — including toilet paper, sanitizing products and non-perishable food items. Meanwhile, some dairy farmers have been forced to actually dump their milk as the pandemic has driven down demand.
In the wake of such a steep disruption, we’ve seen a number of manufacturers repurpose their production lines to try to address gaps in supply. This illustrates — although more dramatically than usual — the idea of manufacturing on demand (MOD).
MOD is an alternative to traditional manufacturing in which products are made based on near real-time demand, rather than future projections. Here are a few key advantages of MOD — which help explain why so many manufacturers are harnessing data to make agile decisions about various steps of the supply chain.
1. Reduced Inventory
One of the biggest risks in manufacturing has historically been overproduction, then having to store the excess inventory until it’s sold. In fact, this is one of the key types of waste identified by the lean manufacturing method. While problematic in a number of different ways, chief among them are those products often need to be sold at a discount, reducing profits. Another expense is physical storage to warehouse products made ahead of consumer demand.
MOD addresses these challenges by enabling manufacturers to produce goods only as they’re required — through production processes that are “scalable and adjustable” based on current data, according to Techopedia.
2. Shortened Lead Time
Lead time represents the interval between the ordering and production of a product. One of the challenges of traditional manufacturing has been scheduling jobs — the queue can get quite long — meaning materials sit around waiting for machines to become available for production. Long lead times are associated with decreased sales, lower customer satisfaction, and hampered profits.
On-demand manufacturing aims to address this conundrum by changing the way manufacturers utilize machines and assemble products. Oftentimes, instead of a beginning-to-end run of a certain product, manufacturers find it more efficient to create parts in batches, so there’s little to no material sitting idle. Ideally, they can work their way down to zero lead time, as measures taken to shorten the queue tend to reap positive results on outcomes.
Business intelligence for manufacturing plays a critical role in helping manufacturers understand equipment utilization and production bottlenecks, as well as variations in lead time and inventory. It’s now possible to collect more data than ever before pertaining to machines, downtime, and processes. Internet of Things-enabled sensors positioned around the shop floor and data analytics tools give decision-makers the ability to analyze data insights to continually refine operations.
3. Customer Satisfaction
As a customer, it’s disheartening to see an estimated delivery date for product days or weeks after you’d hope to get it fulfilled. In fact, it can even drive potential buyers to search for more readily available alternatives, leading to lost sales opportunities and diminished customer loyalty.
Going hand-in-hand with shortened lead time is improved customer satisfaction when buyers get their goods in an expedited manner.
Manufacturing on demand — fueled by advanced business intelligence and production optimization — is poised to shorten lead times, reduce excess inventory, and improve the customer experience.