Designing a Manufacturing Foot Print
Designing a Manufacturing Foot Print
Introduction
Companies have expanded their operations to other countries so as to increase profits, become competitive and survive. However, they face various challenges when they expand their operations to other countries. The companies do not have a clear strategy when expanding their operations and this affects their profitability as they do not benefit from their venture. Also, most companies do not determine the supply cost of altering their manufacturing network and affects their success and survival.
This was evidenced the COO’s company. The company expanded its manufacturing activities to Vietnam and other regions t increase profit and meet customer needs. However, the company was not successful as it experienced various challenges that affected its operation, productivity and profitability. The labor productivity in the Vietnam plant was low labor productivity. Also, the quality was low.
In addition, the fluctuation in currency made it hard to predict profitability in any area. The COO did not think about the strategy well and understand the total supply costs of changing the manufacturing network. The number and location of the manufacturing facilities did not increase profitability of the company but drained it. As a result, the COO decided to focus on the manufacturing foot print design to ensure the company remained competitive.
Many companies have focused on manufacturing network design as it is economic and gives them competitive advantage. Companies in different industries have realized the benefits of manufacturing footprint. Manufacturing foot prints enables companies to remain competitive. The companies have benefited from the manufacturing networks as they have reduced costs and become productive. They have also reduced the costs of establishing manufacturing plants in other countries by develop the right strategy (Mueller & Hardman, nd).
Benefits of a good network design
An optimum network design has various benefits. First, It reduces the unit product cost and total acquisition cost. Second, it enables organizations align with main customers as they shift to low cost regions. Third, it improves margins as the firm with low network cost captures the difference between internal cost and the next best competitive supply choice. Fourth, optimum network design leads to flexibility. Companies are able to adjust to changes resulting from technology, market and disruption by other businesses. Companies can rethink their network design and strategy when launching a new product line and business line. This is because there are no costs and there are few interests vested. Examining network design is vital for existing companies as it determines their profitability and survival.
Companies only remain productive and successful if they evaluate their manufacturing print and adjust their current network. Companies do not adjust their manufacturing prints due to problems of moving a plant. The problems linked with moving a facility outweigh the operational benefits. In addition, lack of crucial infrastructure increased the cost of locating factories far from suppliers, markets and consumers. However, the current business conditions liked improved logistics, better computer and telecommunication systems and streamlined supply chains have compelled businesses to addresses network design problems. Thus, companies should evaluate their network design in order to realize the named benefits and remain competitive (Mueller & Hardman, nd).
Designing a manufacturing foot print and reducing risks
Designing a manufacturing foot print is a hard for many companies and this has affected their productivity, profitability and survival. Companies are not able to eliminate redundant plants and cut costs. Companies should follow various principles when designing manufacturing foot print. First, companies should understand the needs and requirements of customers before designing the manufacturing foot print. This will ensure the foot print meets customer needs. Companies that do not consider customers when design their network faces challenges when satisfying customers. The networks result to low customer satisfaction and loss of revenue.
This in turn, forces the company out of the industry. Companies should consider consumer differentiators when designing the network as customers have different preferences. In addition to that, companies should determine the requirements the manufacturing and supply chain network should serve by looking at the future. Second, companies should determine the economics and challenge restriction. They should determine the costs linked with the design of the network so as to evaluate the benefits and costs of the design.
The costs are grouped in different categories. That is inherent, structural, realized and systematic costs. Inherent costs result from product design and technology. Companies should determine the purpose of the supply chain to address the inherent costs. That is customer requirements, product design, manufacturing process and technology. Structural costs can be addressed by modifying how the firm makes the products. Systematic costs result from operating practices, capabilities, overhead and philosophy in the supply chain. Organizations should change their policies in order to address systematic costs.
Lastly, realization costs result from efficiency and performance. Changing the work practices addresses realized costs. Third, companies should assess alternatives. After identifying the economics and constraints, companies should define the suitable network for the value chain and test it in different scenarios. Companies should take into account the supply network and total production when evaluating various scenarios. Companies can restructure the supply base in cases where the manufacturing of the products is external. In this case, companies should determine his capabilities needed from suppliers and the structure needed to develop an effective supply base.
Lastly, companies should create a business case. They should state the activities needed and financial impact by developing a business case and migration plan. The plan should state the organizational changes, roles and skills of the members and stakeholders. The plan should address a wide range of risks including interruption of supply, political risk among others. The manufacturing foot print should be monitored regularly to identify changes and update (Mueller & Hardman, nd).
The COO ‘s company did not perform as expected after establishing manufacturing plant in other markets as the COO did not follow the steps above. The COO did not develop a manufacturing foot print and this hindered him from determining the benefits and costs of the plants. The company did not identify redundant facilities and this affected productivity as some plants were not product like the Vietnam plant (Mueller & Hardman, nd).
In order to realize the benefits of manufacturing foot print, companies should minimize risks. Manufacturing network designs have various risks. The risks include change in technology, demand, political problems and changes in local taxes. Companies can overcome the risks by bringing enough management talent and appropriate infrastructure (Mueller & Hardman, nd). The COO’s company did not consider the risks when expanding its manufacturing operations to Vietnam and this affected its profits.
The COO did not consider the currency risks when moving the plant. Though the cost of production Vietnam was low, the labor productivity and quality in the plant was poor. In addition, the COO did not determine the costs associated with the manufacturing network design. He did not consider the realized, inherent, structural and systematic costs. The COO only focused on the low cost of production and overlooked the risks and costs and hence affected the company negatively.
The management should describe adaptive plant relocations and flexible supply chain as important in sustaining grow and competitiveness of the organization. They should develop clear targets. They should state specific benchmarks and ensure the company progress to ensure it achieves the targets. Further, they should develop a dedicated organizational unit to manage the manufacturing foot print.
The unit should have adequate resources to manage the manufacturing foot print. In addition, managers should assess the foot print position of the company often and identify opportunities for changes in profits. Finally, the managers should prepare for possible changes in foot prints. They should identify changes that will lead to a profitable footprint design (Mueller & Hardman, nd).
Conclusion
In conclusion, companies should have a manufacturing foot print to continue being competitive in the market. The changes in the business environment have affected companies negatively. Organizations have been forced to adapt to market and technology changes. Many companies have ventured in foreign markets to increase their revenue, market share and profit. They have established manufacturing plants in various regions but have not been profitable. This is mainly due to lack of a manufacturing foot print and network design.
Organizations find it hard to design a manufacturing network, and this has affected profitability. They do not consider customer needs, economic costs and constraints when designing networks. Thus, the networks do not meet customer needs. Therefore, organizations should consider the principles named above when design manufacturing network. They should reduce risks and ensure the networks are adaptable to changes (Mueller & Hardman, nd).
Reference
Is this your assignment or some part of it?
We can do it for you! Click to Order!
