Is Your Organization a Leader or Laggard in Manufacturing Performance?

How to gain a performance edge and become a "Best-in-Class" manufacturing leader.

Today's manufacturers are under extreme pressure to cut costs, improve operations, retain and recruit a productive workforce, and increase profit margins—all while adapting to the industry's constant changes and technological innovations. To overcome these vast challenges and meet ambitious goals for the future, organizations must be operating at the highest level of performance. Unfortunately, however, not every company is configured to achieve its full performance potential. Is yours?

Feeling the Pressure: Turning Stressors into Strength

The Aberdeen Group recently conducted a study that aimed to uncover current and emerging trends in manufacturing, including market pressures, digital transformation, and the purchasing, implementation, usage, and performance of manufacturing and engineering software. It found that many organizations are feeling the stress of today's complex industry pressures, yet few are confident that they have achieved leadership status when it comes to navigating them.

There are four key areas where organizations are feeling the stress. Interestingly, each of these areas is also key to creating strong opportunities for business growth:

• Digital transformation. The COVID-19 pandemic forced companies to update their infrastructure to support remote work and allow greater flexibility for production processes. It drastically accelerated digital transformation efforts.
• Pace of innovation. At large, the pace of innovation in the market continues to challenge manufacturers and engineers to deliver increasingly complex products to customers faster and at a lower cost.
• Greater visibility. Real-time data and greater visibility into KPIs are a must for manufacturing organizations to surface key performance insights and support data-driven decision-making.
• Collaboration. Staying connected is essential in today's remote-centric business environment. And yet, it's often easier said than done. The pandemic and evolving work realities have necessitated a focus on connection across workers and sites.

Survey Says: Classifying the 'Best-in-Class'

In the survey, the Aberdeen Group asked questions about market pressures, digital transformation journeys, and various aspects of manufacturing and engineering software solutions—all focused on understanding how today's manufacturers are responding to today's dynamic business environment.

Aberdeen used the "Aberdeen PACE Methodology" to structure the survey. PACE stands for Pressures, Actions, Capabilities, and Enablers, which are all characteristics and strategies that help determine what it takes to be best in class and what makes these top performers different. The respondents were then broken up into three distinct groups, based on performance in certain KPIs:

• Best-in-Class – The top 20% of organizations are considered Best-in-Class.
• Industry Average – The middle 50% of organizational are deemed Industry Average.
• Laggard – The bottom 30% of companies are considered Laggards.

"Best-in-Class" refers to the top 20% of manufacturers in terms of their average percentage of products meeting revenue targets, complete and on-time shipments, and improvements in manufacturing cycle times over the past year. These metrics demonstrate that the Best-in-Class get their products to market quickly and with fewer operating costs, even as innovation has led products to be more complex.

Every company desires to become Best-in-Class. But to do so, they must take a hard look at five key areas and determine what can realistically change: what processes they should have in place, what KPIs they need to measure, what organizational changes they should make, what technologies they should evaluate, and additional data or knowledge management considerations.

Eyes on the Prize: Addressing Today's Biggest Challenges

Today's manufacturers noted their top five pressures of today in the survey: the increasing pace of innovation, customers' intensifying demands for quality, the need to reduce costs, the flexibility to respond to business demands, and the shift in manufacturing and sourcing due to supply chain challenges and changes. These challenges leave little room to sit back with a hands-off approach to manufacturing transformation. Organizations must address these challenges head-on in the post-COVID-19 and Industry 4.0 world.

The following highlights describe how Best-in-Class manufacturers are addressing these challenges:

• Achieve or maintain a digital transformation (e.g., Industrial IoT, Industry 4.0, Smart Manufacturing). There is a lot of buzz about digital transformation—but less so among the Best-in-Class. Why? Because they have already embraced digital transformation in their organizations. For those organizations that are not considered Best-in-Class, digital transformation must be one of their top priorities, as Industry 4.0 is here to stay.
• Increase focus on Lean and operational excellence initiatives. This is one way that organizations are learning to cope with rising raw material costs, reduce operating costs, and improve efficiency across operations. Incorporating additive manufacturing (like 3D printing) into processes will also increase manufacturing effectiveness.
• Establish company-wide initiatives to close the talent gap. Closing the talent gap requires investments in new technologies like augmented reality to improve the training experience. Cross-training and maintaining standard operating procedures are also critically important.
• Promote collaboration between departments. Collaboration and integration are key factors in improving communication and accessibility in a remote environment. There are many technology enablers that can provide strong visibility into data, empowering manufacturing leaders to make data-driven decisions about processes on the factory floor.
• Build compliance and traceability into production processes. Tracking materials and products from the supplier to the end-user ensures quality at every stage of the supply chain. Weaving a "digital thread" around a ‘digital twin’ from concept to production to field use also ensures efficient and continuous processes.

The Key to Leadership: Implementing an Industry 4.0-enabled MES

All of the above approaches to today's challenges are important, but they cannot be achieved without the proper digital tools, which enable the factory to operate more efficiently and productively. This can be made possible, however, with the right Manufacturing Execution System (MES).

An MES gives manufacturers the opportunity to gain greater insights through high-quality data and real-time visibility into every area of the factory, increase efficiency and maximize uptime with more seamless processes, improve compliance and quality, and adapt flexibly to the constantly changing industrial landscape.

Those with an MES in place are realizing positive results from its implementation. Compared to companies without an MES system in place, manufacturers that use an MES are seeing a 36% greater year-over-year (YOY) decrease in time-to-decision, 33% greater YOY decrease in production downtime, 30% greater YOY decrease in maintenance costs, 25% greater YOY increase in operating margins, and 23% greater YOY increase in employee productivity. These are powerful metrics that set the leaders apart from the laggards.

Choosing the right MES platform is among the most critical digital decisions a manufacturing organization can make. The IIoT-enabled Aegis MES solution FactoryLogix delivers factory digitization, real-time operational visibility and control, and Industry 4.0 capabilities—allowing average or laggard manufacturers the ability to grow into Best-in-Class companies. If you are interested in discovering the power of Aegis' FactoryLogix, you can learn more here: FactoryLogix.

To watch the on-demand webinar "Leader or Laggard? Where Does Your Company Stand in Manufacturing Performance?" click here: Leader or Laggard?