Financial

Scale your way through manufacturing’s tough times


Johannesburg, 14 Aug 2019
Read time 3min 50sec
Lance Zikalala, MD, nCoded Solutions
Lance Zikalala, MD, nCoded Solutions

Manufacturing is a fickle business. So when the seas get rough, it’s natural to hunker down and wait for calmer days. But the difficulties manufacturers find themselves in are only partly due to hard economic times. Other pressures have been at play for a while, says Lance Zikalala, MD of nCoded Solutions:

“Conditions were already tough in manufacturing. Global competitors have become direct competition, some using lower labour costs and large workforces to their advantage. Home markets are not as protected as they used to be and there is also a growing trend of new-generation manufacturing where sellers are now manufacturers as well. I think manufacturers could avoid looking at those when the market was more positive, but those days are gone for now.”

The tendency to keep your head low might weather poor market conditions, but doesn’t address the other factors. Those invite the dreaded word no cost-focused business is happy to hear: 'modernisation'. Yet this change can create better agility and flexibility, offering manufacturers the headroom to adjust, innovate and exploit new revenue opportunities even while keeping costs low and risks limited.

Maintaining a competitive edge

Modernising is a fact for manufacturers if they want to maintain their competitive edge. But it’s not so easy to accomplish. Time truly is money in the manufacturing sector. When a choice has to be made between a costly and lengthy change period or sticking to familiar systems, the latter is often preferred.

“In my experience, manufacturers aren’t anti-technology,” says Zikalala. “But they are always under time and resource pressure, so they will reason that an important project can wait a little longer. But the time and resource pressures never really go away, so the conditions that would greenlight a transformation project never appear.”

Yet it’s the tonic needed in a tough market, particularly when the modernisation in question is highly revolutionary. This is exactly the case with modern digital systems that introduce proper capturing and thorough data administration, creating much better views of the business. It’s a bit of a leap to move from manual schedules on scraps of paper to a real-time performance of manufacturing lines, but the results deliver so much in terms of productivity and efficiency that they can’t be ignored.

Manage costs by scaling modernisation

Manufacturers that wish to ride out the bad weather should modernise as part of their strategy. Yet, how can the circumstances for change be brought about? Transformation projects of the technology kind are notoriously expensive and take years to deliver true value. But not if they leverage modern technology’s ability to scale.

“Modern digital systems are different from their predecessors in two ways,” explains Zikalala. “They don’t have to start with massive footprints or a big underlying software system. You don’t have to jump in with both feet. You can start with a small footprint and scale the system out into other parts of the floor. This helps identify quick efficiencies and problems that are easy to solve. Since you don’t try to do everything at once, you can pace the roll-out, win employee support and track practical indicators.”

The second factor speaks to finances: “Instead of making a capital investment, the project’s funding is operational and managed month-to-month. So the manufacturer can increase its pace and funding in a managed way.”

Manufacturers can’t just lie low and wait for clearer skies, because their competitors are not. But thin margins and poor market conditions make modernisation projects seem very risky. This doesn’t need to be the case: digital modernisation can scale across a business at the rate it can afford and manage.

Every operation struggles from unseen inefficiencies that can be easily remedied with systems that are implemented to complement the status quo. Everything from reliable forward-planning to real-time adjustment of lines is possible, without hefty investment costs or long delays before value appears. The alternative, to do nothing, doesn’t bring anything to the table.

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