How to Create an Agile Manufacturing Plan
Agility is often mentioned as a key to competitive advantage and business success. An agile approach is more commonly associated with computing and data, but it can also be used to describe a manufacturing methodology.
What is agile manufacturing all about and could your business benefit from it? This guide will explain the concept of agile manufacturing, the key elements of the method and provide you with tips on how to implement an agile manufacturing plan for your organization. Finally, we’ll explore the advantages and disadvantages of this approach.
WHAT IS AGILE MANUFACTURING?
Agile manufacturing is essentially an approach a manufacturing company takes to manufacture products. It looks at the processes, tools and training the company is using in order to respond to customer needs and market changes. An agile manufacturing strategy would use processes, tools and training, which enables it to respond to these needs and changes rapidly without jeopardizing the cost and quality of the product.
The focus of agile manufacturing lays on the response time and the aim is to react to customer needs quickly. Therefore, agility and speed become the competitive advantages of agile manufacturing.
The processes, tools and training are often supported by a highly integrated information technology system. The products tend to be highly customizable and modular. The technology is used to allow different players (marketers, designers, the production team) to share data and to use it to solve problems that might slow down the process otherwise. The emphasis is on correcting quality issues and implementing changes at the earliest point in the manufacturing process, as this is considered cheaper and quicker than corrective actions later on.
This requires agile manufacturing organizations to be structured differently compared to traditional manufacturers. These organizations tend to have flatter hierarchical structures, as employees need to react quickly to customers’ needs. This also requires the organizations to have high levels of communication to ensure changes are implemented swiftly.
Furthermore, agile manufacturing is prevalent in well-developed local markets. Agile manufacturers benefit from the proximity to the local market, as it can improve speed and agility. Implementation of changes to products can be much more effective in these markets. Moreover, being close to the customer ensures that agile manufacturers can respond to even slight changes in customer behavior quickly.
THE KEY ELEMENTS OF AGILE MANUFACTURING
The model of agile manufacturing is built on four core elements. These include Modular Product Design, Information Technology, Corporate Partners, and Knowledge Culture.
Modular Product Design
Agile manufacturing tends to create products, which allow modification and variation quickly. This is best achieved by the Modular Product Design approach, which means products are designed in a modular fashion. Modular products are typically built from a number of different pieces, allowing fast and easy variation.
For example, instead of creating the product from a single piece of material, the manufacturer would create smaller pieces that fit together to create the product. If you’d want to change a specific aspect of the product, you wouldn’t need to change the whole process. You could simply make design changes to an individual piece, while still changing the overall look or function of the product.
Agile manufacturing also involves the use of information technology, especially in order to improve internal and external communication. This is essentially about dissemination of information throughout the organization to ensure employees are up-to-date and able to respond quickly.
Proper implementation of information technology allows employees to make decisions quicker in terms of product design. Furthermore, it allows a rapid response time to customer queries, as information is disseminated quickly across the different platforms.
On the contrary to the traditional model of manufacturing, the agile manufacturing model aims to leverage relationships with other companies. Short-term partnerships and co-operative projects are encouraged, as they can help the company to enter and adjust to new or changing markets quicker.
The company will be better suited to improve time-to-market for products by working closely with companies that are already present in these markets. For example, introduction to a new market can be quicker by using an existing supplier in this market prior to establishing your presence there.
Finally, agile manufacturing relies heavily on the creation of a knowledge culture. This means agile manufacturers invest in employee training to ensure rapid change and adaptation are understood and supported throughout the organization.
When a company is considering implementing agile manufacturing, creation of knowledge culture will be key to success. Switching to agile manufacturing is not always easy and appropriate training should be provided to support employees during the process.
THE DIFFERENCE BETWEEN LEAN MANUFACTURING AND AGILE MANUFACTURING
When an organization is considering ways to organize its manufacturing process, they can come across another manufacturing concept called lean manufacturing. While both lean and agile manufacturing can help companies lower costs, improve customer service and boost responsiveness, there are certain differences in these methodologies.
Lean manufacturing is focused on minimizing the costs of manufacturing. The focus is therefore on demand-based manufacturing, which aims at eliminating investments in inventory. Lean manufacturing involves improving the effective use of utilities, facilities and materials. The process is driven by the mind-set that it can be constantly improved to make manufacturing more cost efficient. Therefore, lean manufacturing emphasizes improvement and the measurement of performance.
You could view both models through the analogy of a person. One could be a thin person or one could be a fit person. Thin and fit is not the same, but a person can also be thin and fit. Similarly, an organization can be a lean or an agile manufacturer, or the company could become both. However, an agile manufacturing plan doesn’t automatically mean it’s also lean.
In fact, lean manufacturing is often considered the precursor of agile manufacturing. This is because lean practices can enable agile manufacturing practices. The similarities of these models include:
- Support of revenue creation and sustainability
- Improved competitiveness
The combination of a lean and an agile manufacturing approach is often referred to as ‘leagile’ manufacturing. Leagile manufacturing can be achieved by using several different approaches, including:
- Combination of a lean make-to-stock manufacturing approach for products in high demand and make-to-order agile manufacturing approach for other products.
- Creation of a flexible production capacity for responding to demand surges or unexpected customer requirements.
- Implementation of postponement strategies, which allow the base product to be manufactured in advance, with the final assembly and configuration adding the variation and changes needed based on the final customer order.
The key is to understand both approaches and the benefits of using either strategy. Ultimately, the decision of choosing the right manufacturing system depends on your organization’s needs, as well as the type of product you are manufacturing. While lean and agile manufacturing can have beneficial synergies to keep in mind, these two approaches are ultimately different in terms of implementation and focus.
THE FOUR STEPS TOWARDS AN AGILE MANUFACTURING PLAN
Implementing agile manufacturing in your organization will require careful planning. The process is by no means easy, but the following steps will ensure you focus on the key issues when considering the agile approach.
First, you must conduct extensive research into agile manufacturing. The most important aspects to understand and study include:
- The cost of agile manufacturing
- The processes required for agile manufacturing
- The concrete tasks involved in the processes
You should understand these three aspects in relation to your business. For example, the cost of implementation can vary depending on the industry you operate in and the business model you are using.
One of the ways to get a better understanding of the above points is by examining other businesses. You should try to find organizations similar to your business, which have implemented agile manufacturing in the past.
Furthermore, consider the benefits and downsides to transforming your current manufacturing model into an agile model. We’ll discuss the advantages and disadvantages in more detail in the following section. Consider the points in terms of your business and get a better understanding whether the benefits outweigh the costs in your circumstances.
It’s essential to understand certain products are more suitable for agile manufacturing than others. Examine your products and ask the following questions:
- Would this product benefit from better personalization? Is there a potential market for creating the product as a modular product model?
- Do you know of a product that could be developed through agile manufacturing model? What competitive advantages could your business provide to such a product?
2. Appoint a task force
Implementation of an agile manufacturing plan will take time and you should clearly define the people in charge of managing this change. This not only helps smoothen the process, but it also ensures accountability.
Assemble a task force in charge of creating a plan for agile manufacturing. You can shift job responsibilities within your organization to allow a group of people to focus on the task. Previous knowledge of agile manufacturing can be beneficial, but the key is to support the group and provide them with the necessary resources. Make sure a board member is part of the team, as this change is a strategic shift that will shape the future of your business.
The task force should provide regular updates on the process. The group should have a clear set of objectives it needs to achieve and you want to implement a timetable for the process.
The task force should play an important role in creating the knowledge culture in the company. Whilst you want to narrow down the amount of employees who are in charge or researching the ways to implement agile manufacturing, you want to have everyone in the organization involved in the process. According to the State of Agile Survey, conducted by software provider VersionOne, “general resistance to change” is among the biggest barriers of agile adoption in organisations. Over 40% of respondents felt there’s a tendency to resist change within organisations and this can hinder the effectiveness of agile manufacturing.
3. Examine current supplier relations
Since partnerships are the key to agile manufacturing, you should examine your existing partnerships before implementing the new approach. You will find this important for two reasons:
- First, it ensures you strengthen stable partnerships, which enhance agile manufacturing.
- Second, it enables you to locate partnerships that don’t work for your benefit.
You should re-evaluate your existing supplier partnerships to categorise your relationships to the above two groups. You can take advantage of relationships that might be beneficial for agile manufacturing and get rid of the ones, which are not strengthening your organizational capabilities. Do not stick to suppliers that cause problems, especially in terms of responsiveness and speed.
4. Draw a long-term plan
Finally, you should establish a long-term plan for agile manufacturing. The implementation process will take time and getting agile manufacturing to full speed will be an enormous task.
You should draw a long-term plan together with the task force. This plan should include:
- Benchmarks – What are the signs of success for your business? How can you measure the objectives?
- Milestones – When should key objectives be accomplished?
- Contingencies– What if things go wrong? How to correct mistakes or change direction?
Preparing for eventual obstacles or problems should be an important priority for the team. Major changes to organizational structure, such as the implementation of an agile manufacturing plan, will need to weather the storms, so to speak. It is important to outline possible problems and obstacles beforehand, as well as have a plan for overcoming unexpected situations.
Check out the below video of how Dell implemented agile manufacturing in its company:
THE BENEFITS OF AN AGILE MANUFACTURING PLAN
So, what are some of the benefits of implementing an agile manufacturing plan in your organization? The effectiveness of agile manufacturing strategy comes from its ability to focus on customer satisfaction.
Agile manufacturing achieves great results because it:
- Provides consumers with an instant gratification – Consumers appreciate speed and are clearly ready to pay extra for fast service. Consider, for example, the popularity of next day delivery services. Big online retailers have invested resources to provide consumers faster deliveries. Amazon, for instance, has even started testing its same day delivery in a number of cities.
- Allows consumers to choose – Agile manufacturing guarantees consumers can obtain personalized products without compromising the quality or service speed. Consumers appreciate the ability to make a choice and the ability to tweak a product can make it seem more valuable to the consumer.
Your organization is not only able to provide more choice in terms of current customization, but you’ll also be more flexible in changing the product around to suit future trends.
Furthermore, an organization can also enhance its ability to change. Consumer needs and preferences are not static. In fact, in today’s globalised world, consumer expectations and wishes evolve quickly.
A traditional manufacturing approach is not able to adjust to these trends as quickly as agile manufacturing. By the time a traditional manufacturing process has adjusted to a new trend, the trend might already have changed. But as we’ve explained above, agile manufacturing’s modular product design guarantees you can tweak the product without disrupting the whole manufacturing process. Therefore, reacting to consumer preferences becomes flexible and easy. This will naturally improve consumer satisfaction and ensures consumers don’t look elsewhere for feeding their new requirements.
THE DISADVANTAGES OF AN AGILE MANUFACTURING PLAN
But agile manufacturing can also have its drawbacks. Like any other manufacturing process and methodology, it isn’t perfect in its responsiveness to different demands.
If the new product creates a large spike in demand, agile manufacturing might find it difficult to respond quickly, as it doesn’t always focus on large inventory creation. On the other hand, a drastic drop in demand of high production products could result in unsold products. Both instances can present huge challenges to the business in terms of customer service and financial cost.
Since knowledge culture is the key to agile manufacturing, the cost of educating employees will be significantly higher than in the traditional manufacturing model. You’ll need a highly skilled workforce, which requires quite an investment in terms of training.
Costs are also an issue when it comes to implementing an agile manufacturing plan in an already existing production line. Since you’ll be introducing a modular product design, you might need to invest in new technology, which can be difficult and costly. The complexity of new technologies can come with other issues such as increased production downtime, as maintenance can be more complicated.
Overall, the intensive planning and management required for a successful agile manufacturing process can be difficult to achieve. Your organization must be aware of the costs associated with the methodology and be able to navigate through the research and planning without causing disruptions in your existing business practices.
By implementing agile manufacturing, companies can rapidly respond to consumer needs and requirements without sacrificing the quality and increasing the cost of the product. When the plan is implemented correctly, companies can use the approach as a way to gain a competitive advantage.
But the implementation of the process isn’t always easy and your organization needs to be aware of the costs associated with the process. Proper research to identify best practices is essential and you should implement a company-wide structural change to ensure everyone understands agile manufacturing and its importance to your business. Agile manufacturing isn’t the choice for all companies, but by understanding and examining its benefits and downsides, you can decide whether the process is feasible and cost-effective for your organization.