The Top 10 Risks To Manufacturing Growth (And Countermeasures)
Strategy Deployment isn’t easy. Based on our interpretation of some recent survey results, I think it’s important to keep Strategy Deployment front and center of the executive mindset. Manufacturing executives and senior operational leaders responding to our recent Operational Readiness survey cited a number of ongoing risks to sustainable growth and profitability.
Below are the top 10 risks in descending order of importance, along with suggested countermeasures (and additional resources). Many of these countermeasures reflect core elements of an effective policy deployment program that translates strategic goals into projects, assigns accountability, and establishes performance monitoring systems.
Does your company have the strategies and tactics in place to mitigate these risks?
Risk #1: Conflicting strategic priorities and too many priorities.
When we work on policy deployment with clients, we often talk about cutting their long-term and annual objectives down to the “critical few.” It’s never easy. But projects that don’t align with or support key priorities must be identified and killed because they waste resources and management attention.
Risk #2: Difficulty coordinating across a complex supply chain.
If it was easy to coordinate supply chain relationships, everyone would be doing a much better job of it. But the effort is worth it. A lean value chain facilitates collaboration between customers and suppliers, which enables a company to manage demand much more efficiently. It reduces total system cost by minimizing individual costs like raw materials, finished goods inventory, staffing, and space while eliminating the interface inefficiencies between value-chain participants.
Risk #3: Disparate systems & data sources.
Acquisitions and disconnected priorities can create a hodge-podge of databases and reporting systems that eventually have to be rationalized. System integration, coordination and upgrades are essential today simply for keeping up with competitors. Do you have a timeline and clear plan for aggregating and upgrading your IT systems?
Risk #4: Lack of a continuous improvement culture & process orientation.
Whether you follow a kaizen event or project approach, process improvements can be made anywhere at any time. Organizational culture flows directly from leadership, past and present. Leadership must understand the need for and champion a culture of continuous improvement for it to take root.
Risk #5: Difficulty managing or changing suppliers.
This challenge is related to the effort required to coordinate supply chain activity previously addressed above. A lean value chain synchronizes the resources and information flow to achieve mutual growth in sales and profitability. Working together, such a community takes more waste out of the total value chain, thereby capturing more of the profit in it. Look beyond suppliers to dealers, distributors, and other channel partners to bring effective solutions to targeted customers.
Risk #6: Lack of organization agility and responsiveness.
Operational excellence drives market agility and responsiveness through reduced inventory levels, shorter cycle times and production flexibility. All of these pursuits reduce operating costs and enable a business to respond much more quickly to demand fluctuations.
Risk #7: Unable to free up internal resources.
As noted above, policy deployment requires business leaders to focus the organization on a limited number of critical objectives, then find the resources to support them. Resources that are being allocated non-critical projects must be terminated.
Risk #8: Risk of losing customers.
One of the best ways to avoid losing customers is to always keep one step ahead of their needs and wants. Voice of the customer exercises can provide both a high level view of a market and a product-specific view that pinpoints the key specifications that customers want most.
Risk #9: Lack of cross-functional collaboration.
Collaboration is directly linked culture. It requires a collective will to achieve the targeted results, and collective agreement on how those results are going to be achieved. A full lean transformation almost by definition, by establishing organizational alignment, stops people from working in isolated silos.
Risk #10: Poor or inadequate process for new product development, commercialization and launch.
Design for LeanSigma incorporates production process planning and implementation using a rapid, team-based product and process design within a lean framework. The approach boosts the hit rate and dramatically shortens the lead time to develop and deploy new products.
