7 Nov
2024

How Investing in Manufacturing Technology Helps Create Resilience

The right technology foundation enables streamlined operations, sharper insights, and a faster response to challenges. This article dives into why a tech-forward approach to manufacturing sets companies up to weather downturns—and emerge stronger

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How Investing in Manufacturing Technology Helps Create Resilience

If you’ve noticed resilience floating around as a buzzword recently, there's a good reason for it. To say we’ve navigated through several years of unpredictability and upheaval would be an understatement. From labor shortages to supply chain disruptions, trade instability to increasing customer expectations–and all the other challenges presented by a global pandemic–most companies have had to pivot and adjust on the fly to make it through.

Through it all, however, the US has maintained a state of economic expansion, “defying predictions of a recession,” leaving analysts eager to try to predict the next downturn–while continuing to study what the most resilient companies did to thrive through our previous recession and the pandemic.

While technology sees budget cuts during rocky or slow times, there are several reasons why this may not be the best route. In fact, it was noted by McKinsey that one of the key levers in a “resilience playbook” was the adoption of a “sharp digital program” that creates the most value for the organization. Companies that invested in technology early, becoming tech-enabled “digital natives,” had a strategic advantage heading into the next period of disruption. Thus, even during slowdowns, whether economic or post-peak periods, it’s critical to keep investing in your technology, as it’s become that important to your business’s survival and success.

Ahead, we’ll review why continuing to invest in your manufacturing technology positions you to become more resilient and thrive no matter the external circumstances.

A strong foundation sets your business up for resilience and growth

Like other areas of business, manufacturing technology has evolved rapidly. We now find ourselves in an environment where your IT infrastructure represents the very foundation of your business.

This has its pros and cons, of course. When technology is implemented but isn’t working–when there are too many issues and interruptions–it hinders business. When it isn’t implemented at all, it’s a quick recipe for your business to fall behind competitors, and fast.

Technology enables better, faster, and smoother work, helping you reach your goals. For manufacturers, the right technology can provide access to valuable data and insights that improve processes creating opportunities for you to produce more efficiently. All of which leaves customers more satisfied and likely to return and evangelize your product.

This is precisely why manufacturers with a strong technological foundation are in a better position to navigate unpredictable external challenges. Continuing to build and elevate this foundation, even during slow periods, is the difference between emerging from these times strong or not.

Investing in the right technology for your business gives you a strategic and competitive advantage

It’s not always easy to pull the trigger on new technology. While many SaaS models make tech more accessible, they also require internal investment like staff training to work. McKinsey researchers have observed that most companies often have “lots of little” technology pilots. But such a scattershot focus doesn’t move the business forward.

Many companies also struggle with something known as “Shadow IT” where employees are using redundant or unsecured technology across the organization, creating both cybersecurity risk and budget waste.

The manufacturing technology you need isn’t the technology you don’t use or even the same technology as your competitors. It’s the right technology for your unique operations and business needs.

Now is the time to assess your technology inventory, and evaluate which tools are delivering value–and which aren’t. Which ones are redundant? Which ones have the potential to deliver more value if your business is maximizing its capabilities?

This is also a critical point to ensure your different systems are effectively integrated to avoid data silos. For example, is your ERP talking to your MES or inventory management system?

Double down on the value-creating technologies you identify, and sunset the others for now. Take the time to improve interconnections and integrations if necessary. Not only is this a better strategic use of your tech budget, but it also gives your business time to focus on getting the best ROI out of them, with the most benefit to your teams, products, processes, and customers. In turn, by doing this, you’ve already trimmed your tech budget–before a slowdown hits–and done the work to properly assess which tech inventory is helping your business, and worth keeping through tough times.

Focus on improving margins by proactively cutting operational costs

This brings us to our next point: another key lever in the “resilience playbook” is a proactive focus on improving margins through operational cost cutting.

In their study of previous, pre-pandemic recessions, McKinsey researchers found that the most resilient companies also focused on proactive operational cost-cutting:

“For one thing, they focused on margins or the difference between a product’s or service’s selling price and the cost of production. Companies that showed resilience during the Great Recession focused on improving their margins during the recession through proactive operational cost cutting, which less resilient companies put off until after the recession.”

Investing in manufacturing technology that gives you actionable data to identify relevant opportunities can help you maximize profitability. With the right data, you can clearly and objectively see where inefficiencies and waste are in your processes and prioritize projects like investing in new equipment or cutting labor to make your operations more cost-effective.

What data governance is, and why establishing it is so critical

Data will be what sets manufacturing businesses apart moving forward–but simply collecting data isn’t enough.

What matters is which data, and what you do with it. This is known as data governance: a “data management discipline that focuses on the quality, security, and availability of an organization’s data.”

In other words, is your data a mess? Is it unsecured, putting your entire business at risk for compliance fees and cybersecurity attacks that will tarnish your reputation? Do your employees have access to the data they need to do their jobs, and is it easy to find? Is it high-quality or does it require a lot of manual work to sift through and try to uncover helpful insights?

Data governance helps organize, store, refine, and protect the integrity of your data through policies, standards, and procedures.

For manufacturers looking to build resilience, this starts with aligning purposeful business goals with the right metrics, then analyzing and sharing them properly. When you pair human intelligence and creativity with it, data becomes insights that can be used to drive decisions and strategy. Ensure your employees have easy access to the data they need, to enable their work.

Filter out irrelevant information, and use focused, applicable data to move projects forward–whether your goals are efficiency, quality, or production capacity.  

Finally, good data governance helps you understand which information to communicate to which audience, to ensure it can be used to inform decisions.

Enabling people to fully leverage your technology means you gain the most value

When you have a complete understanding of your tech stack and information is properly integrated and shared, you’re able to fully leverage its value. In addition, your employees need to be empowered to use the technology you’ve invested in–if they’re not, you’re more likely to see issues than results.

Take a close look at the processes your business is running with your tech and identify any bottlenecks or inefficiencies. Introduce tech tips through any regular communication with employees, from newsletters to posters or during daily meetings. Offer regular training sessions–for the appropriate team members–on different technology topics, from cybersecurity to the nuts and bolts of tech workflows. In other words, encourage and invest in a technology-forward culture that’s always open to learning and improvement.

When you combine employee technology training with a continuous process improvement approach, employees are more likely to suggest other ways you could be using the technology to drive more value from it.

For example, tech-trained employees and managers can identify areas where you could refine the customer experience, helping increase customer satisfaction and loyalty, and put you in a better position to retain customers during economic downturns. In fact, continuous training and learning benefits everyone in the business: studies show that companies that actively invest in employee training see better retention, and happier, more invested employees.

How investing in real-time production monitoring builds resilience

When you invest in real-time production monitoring, you immediately connect your teams to clear, objective data that can help pinpoint the root causes of issues and inefficiencies and identify where to get started with improvements, and then track them.

When you pair this with a continuous improvement methodology–which fosters a manufacturing environment that encourages a rigorous examination of operations–you can also mobilize teams towards clear objectives, with a culture of accountability.

Employees can be more easily engaged, as they can see how their efforts are making a positive change and work together to help create a more cost-effective operation. This approach also looks at every improvement, no matter how small, as part of the sum. In other words, every small change adds up, so employees should be encouraged to contribute their observations and ideas, assign them to key goals and KPIs, track their impact, and assess their success.

By adopting this kind of growth mindset, and continuously identifying opportunities to cut waste and costs, your business builds a habit of resilience.

Key takeaways

Manufacturing is increasingly competitive, and technology is pushing businesses to move and adapt fast. Manufacturers who don’t adopt technology or do so slowly, will only end up falling even more behind.

Businesses that invest in building their tech infrastructure create a foundation for their businesses to thrive through any circumstances, by carving out more efficient processes, creating better quality products, and delivering superior customer experiences that keep pace with evolving demands and expectations.

Taking the time to thoroughly assess your technology investments, train employees, and ensure you’re managing data properly is a strategic approach that ensures your business is only paying for the tech that’s delivering value. All that’s left is to fully leverage that technology for the best ROI.

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