The value of reliable plant info
Access to accurate, real-time plant information has become so important to manufacturers seeking to optimize their operations that packaging professionals would do well to think long and hard about why good plant information is so important.
This white paper describes the value of good plant information for manufacturers regardless of whether they compete on the basis of operational excellence, product leadership, or customer intimacy. It was posted at MachineTruth Blog by George Dalle Ave, director of solutions development at Shoplogix.
In this article, let's take a look at how manufacturers can improve their strategic advantage through the use of accurate plant information. We'll begin by discussing the possible types of generic strategic advantages and move onto the role that plant information can play in creating strategic advantage. Most readers probably understand there are three generic ways to compete. A manufacturer can compete on operational excellence, product leadership, or customer intimacy. While all manufacturers need to include each discipline in their execution, they need to focus on one area and decide to be a leader in that discipline. It is important to understand that it is not possible for a manufacturer to direct resources on being the best in all three areas. In this situation what typically happens is the manufacturer becomes a 'middle of the road' company in all three areas and a leader in none. Author Michael Tracey put it best when he drew an analogy to the Olympic Decathlon. In the decathlon, athletes compete in sprinting, long distance running, long jumping, pole vaulting, etc., making the decathlete, undoubtedly, one of the best athletes in the world. However, when compared to an Olympic sprinter or Olympic long distance runner, a decathlete is not in the same class. Why? Principally because the sprinter focuses all his time on running the 100m as fast as possible. A sprinter's training, diet, and muscle mass is completely geared to making him the best. Since a decathlete has to be a generalist, they cannot possibly compete against the sprinter. A similar situation arises with manufacturers, they need to choose one of the three generic strategic disciplines and focus their energy on being the best at that discipline. For example, a tier one pharmaceutical manufacturer may choose to compete based on a product pipeline and invest heavily in new products – this is product leadership focused. A generic pharmaceutical manufacturer may compete based on keeping their costs as favourable as possible – this is an operational excellence focus. Finally, a contract pharmaceutical manufacturer may compete based on integrating their information systems with the tier one pharmaceutical company to provide the best customer experience – this is a customer intimacy focus. Now let's take a look at each generic strategic discipline to determine the role that accurate plant information can play in improving competitive advantage and discuss examples of possible implementations of the strategic model to leverage the manufacturers' advantage.
Let's start with operational excellence, as this is likely to be the easiest area to grasp. Companies that compete based on an operational excellence look for ways to keep their costs under control and pass that cost savings onto their customers. They align their operational and business processes to achieve a cost advantage over their competitors. They do this by continually reviewing their inventory, supply, production, delivery process to ensure they get the highest throughput from their value chain. The internal processes of these companies are geared towards understanding exactly where problems are and removing them. This can be done through identifying the bottlenecks within current processes and removing them as quickly as possible. Companies that compete on operational excellence require real time accurate information on production costs (raw materials, inventory, labour, and energy). They also need trained operators, who can recognize waste and eliminate it. These companies constantly determine which products are profitable and which are not. If they cannot drive the costs out of a product to make it profitable, they need to prune that non performing product and develop better products.
Companies that compete based on a product leadership position will invest heavily in new product development and will look at how their products perform within their ecosystem. They continually evaluate which products are able to produce the best returns. These companies are interested in establishing production standards that allow them to measure how effectively their product can be manufactured. They are interested in being able to bringing products to market more efficiently and faster than their competitors. These companies will often invest heavily in flexible manufacturing processes and will gather information to help them understand how quickly than can change to a new product line, due to the need to bring products to market more efficiently and faster than their competitors. Towards the end of the product lifecycle, these companies will begin to look for ways to stretch out the value of the product, by driving down costs, while they begin to bring new products on line. These companies need to understand the ability of their suppliers to perform with the newly created products, while being able to quickly and efficiently identify supplier problems early. This process will enable companies to maximize profits as their product enters the high adoption part of the product life cycle curve.
Companies that compete based on customer intimacy are interested in providing the best experiences possible for their customers. These companies will invest in quality programs that ensure only good products are delivered to the customers. In the cases where a defect has been sent to the customer, these companies will have well defined processes to ensure that the cause of the defect is completely understood and that immediate action is taken to make sure the problem does not happen again. Customer intimacy focused companies often link their processes tightly with the customer and invite customers into the manufacturing process as much as possible. This often allows companies to provide real time access to manufacturing information on quality and delivery for that specific customer. In order to ensure that quality processes can run properly, companies require access to the right quality information to ensure their quality processes can be run properly.
From this high level we can see that regardless of the way a manufacturer competes, real time accurate data, directly from the plant floor, is critical to developing a competitive advantage. An operationally excellent company requires production information that allows them to drive out costs. A product leadership company is looking for plant information on their ability to introduce new products and manage them through the product lifecycle. A customer centric company is looking to provide customers with real time access to plant information, to ensure they have the best experience possible.