If a company is doing business on the market, it means that it is able to meet a need of the market, regardless of whether it is a company with a long history behind it or a “young” company.
A historical company may see the advantage of being “a company founded in 1960”, perhaps with a structured sales network, become less and less important compared to a new company, since over the years the internet has made it possible to obtain information much more quickly.
In the past 10 years, young companies have had a huge advantage compared to long-standing companies.
And they have Internet to thank for it. Indeed, in the past it was much more difficult and expensive to publicise a company; they had to go out and find customers in order to sell their products.
TODAY, IT IS THE CUSTOMERS THAT LOOK FOR THE PRODUCTS THEY NEED
You certainly do the same: when you need a product, you search for it in Google, after a few seconds you get an entire list of the products you are looking for in fractions of a second.
This way of working has literally turned all types of industries on their heads, making things more difficult even for long established companies that used their name and their history as a means to acquire customers.
The results of all of this is a very liquid market, where the request for products seems to have really gone crazy.
With this work method, there are customers that, sitting in front of a keyboard, look for products the moment they need them, with less and less planning on their part.
Even in my sector, when talking to customers to which I supply machine tools, I have noticed that this phenomenon is making things increasingly difficult for traditional manufacturing companies.
The customers tell me that in the past, they used to sit down with the supplier and plan the production of components for the upcoming 12 months.
TODAY, CUSTOMERS APPEAR TO HAVE GONE CRAZY…
…BUT THE TRUTH IS THAT THEY HAVE SIMPLY STOPPED PLANNING!
Nowadays, end customers no longer plan, that’s why they seem to have gone crazy.
In technical terms, the market is defined as being liquid.
It is virtually impossible to prepare a reliable forecast, and this puts manufacturing companies in a difficult position, since they are torn between stocking up at their own risk and danger in order to sell to the customer at the latter’s request and not stocking up, perhaps losing the sale opportunity because delivery takes too long.
Of the two options, working to stock up the warehouse seems to be the winning choice, but it is actually a very dangerous way of doing business since it causes the following problems/waste:
- UNSOLD STOCK RESULTING FROM WRONG FORECASTS
- HIGH ECONOMIC VALUE OF THE STOCK ON HAND
- EXPENSIVE TO CHANGE FINISHED PRODUCTS IN CASE OF NEED
- INVENTORY AND OCCUPIED SPACE COSTS
Of course, the choice of not having stock on hand allows you to avoid the negative points listed above.
At the same time, however, if your production method does not change, the final result may be that your company is unable to meet the requests of the market.
The definition of the word CRISIS entails a change with respect to the past and with respect to the ways we were accustomed to doing things.
When this happens, it catches us off guard and generates a feeling of insecurity, since it looks like nothing is working any more: this moment is called a CRISIS.
When you find yourself being told during various workshops that there are opportunities to be seized during a CRISIS, even if this many sound like a cliché, there is actually a bit of truth in it.
When the market is very liquid, preparing sales forecasts is too risky, but doing nothing is just as risky. So, what should you do?
YOU NEED TO STAKE IT ALL ON FLEXIBLE PRODUCTION!
WHAT EXACTLY DOES IT MEAN TO “STAKE IT ALL ON FLEXIBLE PRODUCTION”?
I put these two words together in order to be able to describe the ideal condition needed to deal with a liquid market situation.
A flexible system is needed in order to adapt to the requests being made, but, at the same time, the production system also needs to be fast, because flexibility alone is not enough: customers also demand fast deliveries.
In order to be successful in a liquid market, the two main pillars must be FLEXIBILITY and PRODUCTIVITY. Now, imagine you have already installed this type of system at your company.
This system will guarantee the following advantages:
- REDUCED FINISHED PRODUCT STOCK
- QUICK DELIVERIES
- LESS RISKY INVESTMENT
- EASY-TO-USE SYSTEM
With a Flexible Production system, the investment risk is very low since the system is able to quickly adapt to changes in the market and therefore does not generate any crisis situation.
At the most, the part clamps are adapted and the system can quickly start producing new pieces which before were thought to be impossible to make on this type of production machine.
THIS SYSTEM EXCLUDES CHINESE COMPETITION!
A Flexible Production system automatically excludes Chinese competition since, at these levels, Chinese companies cannot compete due to the customer’s immediate requests and to the execution times.
Here’s a practical example. In case of a customer that wants to purchase 5000 pieces of a component you are already familiar with, but with new variables, such as, for example, a couple of cuts and two threaded holes, with delivery terms of 8 days, how can you meet this customer’s request?
With a 3-SPINDLE MULTICENTER, this piece (already produced in the past) would need, on average, a tooling plus requested modifications of about 4 hours.
Let’s take our time, adding an additional 4 hours in order to obtain the approval to produce from the control room, for a total of 8 hours for the machine to be ready to start.
With a hypothetical cycle time of 30 seconds per piece, our MULTICENTER will produce 120 pieces/hours, for a total of 1,920 pieces a day considering two work shifts a day.
Considering a department efficiency of 90%, we have a real figure of 1,728 pieces/day.
With this situation, it will take us 3 days to produce the 5000 pieces. By adding an 8-hour shift for the fine-tuning, we have a total of 4 days.
HOW CAN CHINESE COMPANIES COMPETE WITH THE NUMBERS PROVIDED ABOVE?
Of course, Chinese companies are excellent at stocking up their warehouses and offering their products at rock-bottom prices, so I don’t think it is a good or wise idea to look for a head-on clash, attempting to do the same thing and thinking you can get away with it.
What I am suggesting instead is to look at the situation from a different angle of attack, and to specialise in a Flexible Production system.
This system is protected against Chinese competition because it moves the challenge to a different battlefield, where the lowest price is not the main issue in the choice of supplier.
For more information on the Method “Flexible Production”, click on the following link:
Expert in Flexible Production