How to Survive with Flexibility in Manufacturing

Flexibility: The key to survival for manufacturing companies

"We define flexibility as the ability to quickly react to changing demand volumes within the current supply chain and production structure. Changeability needs further investments to adapt to the changing environment."

Jens Niemann, 2019
BMW AG
Source

As you can see from the quote, the topic of flexibility in production is also on the minds of major automotive manufacturers. Since 2019, however, both the market environment and the technical possibilities have changed dramatically. We therefore take a critical view of the focus on existing supply chains. In the meantime, digital manufacturing platforms offer the possibility to dynamically use workload and demand-related supply chains. Flexibility is even more important today than it will be in 2019 - at the same time, the possibilities offered by digitization allow the low-threshold use of flexible supply chains.

Flexibility plays a paramount role in industry and manufacturing, as it makes it possible to respond quickly to changes in demand or the market environment. Flexible manufacturing, for example, can quickly adapt to new products and adapt production processes and structures to new requirements. The need for flexibility has never been higher than it is now, as it will help determine the survival or demise of manufacturing companies.

In manufacturing, there are different types of flexibility, such as machine flexibility (the ability of a machine to produce different products), spatial flexibility (the ability to move machines or equipment to different locations), and time flexibility (the ability to adjust production to demand). The biggest impact, however, is the creation of flexibility through distributed purchasing strategies, which is currently being facilitated by increasing digitization.

Internally, flexibility is achieved in various ways, for example by introducing lean management methods, using modular workplaces or using adapted automation technologies. All of these measures help to increase a company's flexibility and adaptability and better prepare it for changes in the market environment. However, many studies show that an internal increase in flexibility almost never achieves the efficiency increase of an organizational restructuring of manufacturing through outsourcing.

One of the most important reasons is that external suppliers usually have more specialized manufacturing capabilities and infrastructure than a single company. This means that they are able to carry out production faster and more efficiently and ensure higher quality standards. By leveraging these highly specialized resources without making the necessary investments, high-performance and efficient manufacturing can be achieved that is hard to beat in terms of flexibility.

In addition, outsourced manufacturing services are also more efficient, as they allow companies to focus internal resources on more value-adding areas, such as developing new products or improving business processes.

Global crises drive need for flexibility in manufacturing.

The COVID-19 pandemic and the Ukraine war have changed the need for flexibility in manufacturing in radical ways.

The COVID 19 pandemic initially led to a sharp drop in demand for many products, but at the same time abruptly increased demand for other goods. As a result, a well-rehearsed system of supply and demand was thrown out of balance across all sectors. As a result, many companies had to reduce or halt individual production, while at the same time launching new products Flexible manufacturing was able to respond more quickly to changes in demand in this situation by adjusting its production or developing new products.

The Ukraine war also helped to increase the need for flexibility in manufacturing, as it led to supply bottlenecks and delays in the procurement of raw materials and components. Companies that were able to quickly adjust their manufacturing and find alternative suppliers were better able to manage these bottlenecks.

Overall, the need for flexibility in manufacturing increased during the COVID-19 pandemic and the Ukraine war, as companies needed to respond quickly to changes in demand and the market environment to maintain operations.

For companies that rely on in-house manufacturing, where production is done by a company itself, will experience some disadvantages of this strategy in terms of flexibility.

• One of the disadvantages is that it becomes more difficult for the company to respond quickly to changes in demand because it is less flexible than external suppliers. For example, it may take longer to acquire or commission new machinery or equipment to start production of a new product.

• Another disadvantage of in-house manufacturing is that the company is less flexible when it comes to moving production to different locations. This can be a problem especially if the market situation changes and the company wants to move its production to another location.

• Finally, in-house manufacturing may also be less flexible when it comes to introducing new technologies or adapting production to new requirements. The company may have to invest more time and resources to make these changes, which can limit flexibility.

Digital on-demand manufacturing makes flexibility accessible and affordable

On-demand manufacturing, also known as just-in-time manufacturing or make-to-order manufacturing, is a production concept in which production is not started until an order is received. On-demand manufacturing can be a suitable means of achieving greater flexibility, as it makes it possible to respond quickly to changes in demand and adapt production to actual demand.

On-demand manufacturing also has some advantages over other manufacturing methods. One of the most important advantages is that it can lead to a reduction in inventory and therefore lower costs. Since no products are produced in advance, fewer resources and money are invested in inventory. In addition, the use of manufacturing networks (manufacturing platforms) also allows dencentralized, distributed access to materials and tools, so that greater resilience is achieved.

Overall, on-demand manufacturing can be a suitable means to achieve higher flexibility, as it allows to react quickly to changes in demand and to adapt production to actual demand. It also has some advantages such as the reduction of inventories and the possibility to respond to individual customer requests.

In particular, manufacturing platforms that digitally handle a large network of manufacturers and centrally manage purchasing, manufacturing and logistics processes can leverage the network advantage for their customers. Intelligent instant quoting algorithms reduce the time to order to seconds. In this way, digital solutions make the benefits simple and accessible.

Therefore, we have collected a list of recommended providers for you on our site, where you can get further information.