Failure of Manufacturing Companies to Meet Global Competitive Pressures

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Factors that Influence a Manufacturer's Agility

Agility, in a business and organisational sense, refers to the capacity to respond to changes in the environment or market advantageously. Essentially, agility, including in the context of manufacturing, enables an organisation to thrive in an unpredictable environment and agile manufacturing creates value for customers by responding quickly to changes. Drivers of change in the environment in which manufacturers operate include consumers (and their shifts in preferences), competitors (and their potential to introduce viable substitutes), suppliers (and changes in the supply chain), and regulations. Factors influencing manufacturing companies' capacity to respond to these changes, i.e. their agility, include technology, design of the manufacturing process, the facility layout and the supply chain.

Technology

  • Technology is an important factor in determining the agility of an organisation. If the technology available is not viable in the current market, either due to a lack of expertise and skills, input availability or other factors, then the agility of the manufacturer is compromised.
  • Technologies such as industrial robotics and fully automated warehouses can be useful scaling up and scaling down manufacturing and production in response to changes in the market without extensive to employed personnel (thus shortening the response time).
  • An example of technology being a limiting factor is Alta Motors. While their products were innovative and ahead of their curve, the technology they used was not suitable for a niche market. Their "market that was relatively small (electric dirt bikes) and likely couldn’t support the cash burn rate needed to charge ahead as quickly as Alta was going". A more agile company could have scaled down while innovating to match the changes in its market size.

Design of the Manufacturing Process or Facility Layout

  • Agile organisations are capable of manufacturing quality products while remaining flexible. If issues arise in their market, they should be able to make quick changes to their products or their designs. According to Forbes, agility is also characterised by an "ability to change products (product specifications) quickly and easily, even effortlessly".
  • This ability to change product specifications is vital should there be issues in the market (product failure) or the invention or discovery of a better, cheaper or faster way to produce the product or the desired outcomes from the use of the product. The ability to change these specifications rely on several things including the design of the manufacturing process and the actual physical layout of the facilities.
  • Jawbone was manufacturing mobile and wearable technology. However, their products were not performing well and even though they were innovative. Their customers were exposed to expensive but limited devices and, at the same time, Fitbit was offering a comparable product. Jawbone was not agile enough to respond to these failures and the influence of competitors in the market because either the design of their manufacturing process or the layout of their facilities could not enable them to change their product to be more competitive.

The Supply Chain

  • Supply chain management is key to ensuring that a manufacturing company is agile. If a manufacturer's suppliers are unable to adjust to meet the changes required by the market, the manufacturer's ability to adjust to the benefit of its consumers is affected.
  • Further, supply chain contracts and transportation along the supply chain are not insignificant and could deeply influence the ability of a manufacturer to react to changes in the market. I sudden rise in demand not met by the ability to suddenly increase production indicates that the manufacturer is not agile as is the inability to influence the pricing of the product.
  • Failure to exert control on the supply chain leads to a lack of agility. An example is J. Crew. The clothing line's manufacturer was unable to compete when they were unable to adjust their production cost in a time when "consumers became more and more thrifty". Whether this was due to them being unable to change either their supplier contracts or transportation costs, they were not agile enough to adjust their pricing in response to changes in their consumer base.

Research Methodology

Peer-reviewed studies were the basis of defining and identifying drivers of agility. The most recent examples of failure were used to demonstrate the impact of a lack of agility.
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