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July 15, 2019

Agile Manufacturing, Ramp-Up, OEE, IoT, Productivity

What are the top 5 manufacturing challenges today?

Today’s manufacturers in the metal cutting industries face numerous challenges. Distilled from conversations between myself, my colleagues and hundreds of manufacturers globally – from family-owned subcontractors to large aerospace enterprises – the following five themes sum up the essentials. This blog post will be followed by a second part discussing how to handle these challenges.


Manufacturing Challenge #1: Shortening product life cycles (and increasing level of product customization)

Industrial goods are getting increasingly customized. This means more models and versions of each product, making the life cycle of certain production items shorter. One could say that the clock speed of business today is faster than ever before. To get an idea of the magnitude, let’s take an example everyone knows, i.e. Mercedes Benz cars, which have lots of industrial manufacturers in their tier 1-3 levels. In the 1980s, there were no more than 10 different model variants –  a number that has since risen to around 30 in 2019. The same phenomenon is happening with valves, compressors, machine tools, drills and other kinds of industrial products. And just like with Mercedes cars, the driver behind industrial goods customization lies in the increased customer demands for more special and niche applications solutions.

For metalworking manufacturers, this means that introducing new parts to the current manufacturing process must be easy and economically feasible, which boil down to two questions:

  1. Can the existing processes and systems be used for the new entrant?
  2. Can the new product be introduced without disturbing the current production?

The first has to do with manufacturing process and equipment versatility, especially around set-ups, fixturing and tool management, while the latter requires good offline preparation functionalities, such as CAM-driven NC-programming and production simulation.


Manufacturing Challenge #2: Demand for shorter delivery times combined with shortened planning horizon

This point is especially true for subcontracting (job shop) companies. Many manufacturers don’t know what they’ll be producing next month, let alone in six months. At it’s worst, the planning horizon may be less than two weeks!

Again, if we consider the value chains of industrial goods, we can see how LEAN-types of pull-production paradigms put pressure on the whole value chain. In addition, to satisfy the needs of customer immediately, the general trend is also shifting towards shorter delivery times – and not in half a year. Non-OEM manufacturers also face this challenge as demand forecasting is a difficult and ambiguous endeavor.

Traditionally, manufacturers have fought this problem by producing items to stock but that just leads into our next challenge.


Manufacturing Challenge #3: Pressure to reduce capital tied up in inventory

Stock is always a risk. It ties down capital, thus hindering efficiency and turnover figures. No company can be 100 % certain there will be demand for all the items in stock. Technical risks include product revisions and shorter product life cycles making the stock possibly obsolete. More than anything, every euro, dollar or yuan invested in stock produces nothing.  Nevertheless, smaller stocks cause a dilemma concerning being able to answer the shortening delivery time requirements.



Manufacturing Challenge #4: Labor shortages

Many manufacturers today suffer from a lack of skilled labor to run the production. This is especially the case for machine operators and manufacturing engineers such as NC programmers and method engineers. Labor shortage can be the pivotal factor in preventing growth – and that’s a game where everyone loses. This dilemma is certainly not getting any easier when we add to the discussion the three already presented manufacturing challenges: an increasing amount of different product variants combined with shortened planning horizons and pressure to reduce inventory sizes usually means increasing the amount of setup work, production planning and method engineering on the factory floor.


Manufacturing Challenge #5: Implementing data-driven manufacturing

There’s a lot of hype around the internet of things and digitalization. These megatrends are said to provide incalculable value to the manufacturing industry – but how? How could any manufacturer have access to this value? In today’s IoT and Industry 4.0 terminology filled discussion, it’s not easy to figure out what the smart first steps are for a manufacturing company looking to utilize a more data-driven approach in manufacturing.


Is there any way out?

Solving these five challenges is not easy – it’s more like a never-ending story. Surely there will always be a demand for even shorter delivery times and the level of product customization is not getting any lower. Focus should, then, be placed on how to handle the challenges instead of trying to eliminate them in vain. In my next post I shall present ideas how to do that. For those of you keen to know already, the solutions revolve around:

  1. Machine and device automation
  2. Data system integration
  3. Sophisticated production planning, execution and analytics software
Part 2 of this series - The Solutions