by Kelsey H | Mar 22, 2022 | Industry News
So, have you heard much about the ongoing supply chain issues in the manufacturing industry?
In all seriousness, pandemic-related shutdowns, rising shipping prices, and fluctuating trade agreements have all wreaked havoc on the US supply chain, which has affected companies’ ability to provide the products consumers need. For years, US companies have outsourced manufacturing of key parts to countries overseas, where they could get large volumes and a low price. However, due to the significant delays and struggles to find freight (let alone affordable freight), businesses have started to prioritize control over low costs.
As a result, some of the largest American companies have started to reshore their manufacturing sites in hopes of regaining control and security over their own processes. As these organizations pave the way, we expect more domestic manufacturers to follow suit in the months to come – especially because struggles with overseas plants have already been going on for years.
The Trade War
This shift to bring manufacturing back to the US has been in process for years. In 2018, President Trump introduced tariffs on $50 billion of product from China and other countries in hopes of encouraging American companies to keep their business in the US. Though the tariff rate was reduced in 2020, they have remained in place until China meets its goal of increasing its US purchases by $200 billion.
President Biden has recently echoed the need to bring manufacturing back to the US, particularly in light of the semiconductor chip shortage that left Americans in short supply of goods like cars and electronics. The shortage has not only resulted in low inventories of essential products, but also increased their prices and slowed overall US economic recovery. Biden subsequently encouraged Congress to pass legislation that would provide up to $52 billion in subsidies to companies who invest in semiconductor manufacturing within the US.
Manufacturers Begin the Reshoring Process
Even before a semiconductor manufacturing bill passed through Congress last month, some of the country’s largest manufacturers had already taken semiconductor chip manufacturing into their own hands. Earlier this year, Intel announced plans to invest $20 billion into a semiconductor chip plant in Ohio, while Samsung plans to build a $17 billion plant in Texas. Similarly, GM and Toyota have both invested billions into electronic battery production in the US, products that have typically been manufactured overseas. According to Toyota’s Group Vice President for Enterprise Strategy, bringing semiconductor production back to the US is a “big endeavor, but it’s the future.”
As construction for the new plants are set to kick off in the coming year, these facilities have an opportunity to ensure that their processes are fully optimized and highly efficient from the beginning. If the goal is to prevent future shortages and backups, companies must put in safeguards against other potential delays that could impact production. A planning, scheduling, and capacity analysis tool like VirtECS can identify the most beneficial investments, maximize throughput, and increase overall production capacity in a new plant. Implementing VirtECS from the beginning will help production start smoothly and avoid time-consuming changes down the line. If you’re interested in learning more about the benefits of using VirtECS in your organization, one of our experts would love to chat with you about your plant’s unique challenges and needs.
by Kelsey H | Mar 8, 2022 | Industry News, Planning & Scheduling
As manufacturing organizations become increasingly complex, their plants also become increasingly difficult to manage and plan for. Without tools to gather data and analyze their processes, businesses are left making manual calculations or taking uncalculated risks. In recent years, many manufacturers have started using a different strategy to optimize their facilities – the digital twin.
A digital twin is essentially a full virtual model of your unique manufacturing plant, designed to match your facility’s physical capabilities down to the floor layout and equipment models. Because the digital twin is a representation of your exact plant, it can be hypothetically tweaked, reworked and adjusted to test any possible improvement. This power can help organizations find the most optimal way to operate before making any purchases or final decisions.
Digital twins have emerged as an essential planning tool for any manufacturer. According to GE, a digital twin tool like VirtECS provides increased reliability, reduced risk, lower maintenance costs, improved production quality, and faster time-to-value. In our experience, two of the primary benefits of using a digital twin are the ability to troubleshoot and solve problems quickly as they arise, and strategically planning for future innovations and improvements.
Increased Control Over Problem-Solving
By offering a virtual account of your exact plant, a digital twin gives operators complete oversight and control of each piece in the manufacturing process. For example, say an engineer discovers an equipment issue that requires extended maintenance. Without an advanced tool, your team may need to physically test several ideas until the problem can be fixed. If it’s not seen as a major obstacle, the issue might even be ignored altogether in the interest of conserving energy.
With a digital twin, on the other hand, the team can immediately start using the model to quickly evaluate the best plan to work around the damaged equipment for a longer period of time. Similarly, if there’s a disruption to the supply chain, organizations can use their virtual plant to plan ahead and assess the possible production routes around the absent materials. The digital twin provides insight into exactly how the plant will perform under the new adjustments, allowing the plant to choose the schedule that is least impacted by the disruption.
Future Planning
In addition to analyzing past obstacles and solving current problems, a digital twin can also help operators understand how the plant will perform in the future. Drawing on its vast collection of plant data, the digital twin can handle adding, subtracting or replacing parts of the process and illustrate the resulting effect on production. This feature is especially helpful for organizations considering new investments or capital expenditures. Once the new potential piece of equipment, production line, or tool is added into the digital twin, the software will simulate the new production schedule and consequent output. Your team can compare the outcome to the existing plant setup and the cost of the investment to determine if it’s worthwhile, or if the money can be better spent elsewhere.
The digital twin can also help to anticipate future issues that may arise before they happen. For example, the model can use recent plant data to predict upcoming repairs or breakdowns with equipment, giving operators time to order new parts or schedule maintenance. Fixing these potential disasters in advance will reduce costs, limit waste, and ultimately allow production to continue with minimal disruptions.
VirtECS software has been allowing customers to create a digital twin of their manufacturing process for nearly three decades. With VirtECS, manufacturers can discover how to enhance throughput, reduce costs, decide the best capital allocation, and thoroughly optimize the entire plant. If you’re interested in setting up a digital twin for your facility, send us a message and one of our experts will help you get started
by Kelsey H | Feb 21, 2022 | Industry News, Planning & Scheduling
In a global market that tends to be chaotic and ever-changing, there will come a time when every manufacturer may find it prudent to detour from the typical production plan to capitalize on an opportunity or meet the needs of the moment. Production alterations can be as simple as ramping current production up to satisfy demand, or as drastic as creating an entirely different product that consumers are desperately searching for.
During unprecedented times, this kind of manufacturing pivot can be a make-or-break moment for a company. Taking a calculated risk with production may be the difference between lost revenue and a new, profitable avenue for your business.
Pandemic Pivots
In the spring of 2020, as COVID-19 quickly spread across the country, health experts quickly publicized the increased need for a variety of protective or medical materials, such as face masks and ventilators. These products were needed so urgently that the companies who normally manufacture them would not be able to produce the devices quickly enough on their own. Within days, savvy plants in similar industries adjusted their plans to meet demand, utilizing their existing inventory of raw materials to create the health and safety products that were suddenly vital to our world.
The ability to quickly shift production isn’t limited to a certain industry or type of plant. For example, when hospitals expressed that they had a shortage of face shields, Burton Snowboards in Vermont used the snowboard materials they had on hand to design and manufacture PPE for hospitals across New England. Naturally, several clothing designers also used their skills to produce thousands of fabric face masks that helped consumers protect themselves on a daily basis. For their part, Ford dipped into its inventory of automotive materials to create more than 50,000 ventilators and 32,000 respirators, among other medical products, which hospitals still have in insufficient supply. These companies’ efforts to change their manufacturing plans made a real difference in our ability to fight the pandemic, while also guaranteeing work for its employees during an unstable economic time. Additionally, as altruistic as their intentions may have been, creating and donating these essential materials kept these businesses top of mind for consumers, who will eventually be ready to purchase snowboards, cars, and new clothes again.
Monitoring Market Fluctuations
In addition to an increasing the need for PPE, the pandemic has also caused major disruptions to the supply chain in other industries for a variety of reasons. Lifestyle changes have altered consumer behavior, restrictions have limited plants’ output, and labor shortages have led to product shortages. As a result, there has been a gap between what consumers need and what businesses have logistically been able to provide.
However, some companies have strategically worked around recent supply chain issues. In the auto industry, while other manufacturers were forced to cut production due to semiconductor chip shortages, Toyota’s production totals and sales soared because they had alternative suppliers and extra inventory already in place. As we discussed in an article last year, securing backup suppliers is vital to strengthening your supply chain and potentially even lowering material costs. Manufacturers in other industries have also altered their production schedules to offer new products that fit their audience’s changing needs or provide substitutes to items that are out of stock for an extended period. This ability to almost instantly pivot from original manufacturing plans can have a significant financial payoff. Toyota’s shift in their manufacturing plan helped them lead the auto industry in sales in 2021, ousting GM for the first time since 1931.
Become Your Own Supplier
As manufacturers tire of dealing with unpredictable delays, we’re seeing vertical integration become more common throughout the industry. Within just the last year, many businesses have acquired shipping or logistics companies and raw material manufacturers in order to regain control of their own supply chain. One of the major challenges of the volatile global supply chain, particularly for manufacturers of end products, has been not knowing about material shortages or delays until production schedules have been set and it’s too late to make drastic changes. If these companies can become vertically integrated, they can keep better tabs on the status of each step in their supply chain, giving them more time and flexibility to plan around anticipated changes in raw material availability.
If vertical integration isn’t in the cards yet for your manufacturing business, the capacity to execute a quick change to your production plan is key to weathering economic instability. Without a planning and scheduling tool, though, it can be a complicated, time-consuming, and ultimately futile process. Tools like VirtECS enable manufacturing plants to seamlessly input any proposed change to their plan and find a new, optimized production schedule in a fraction of the time it would take to accomplish manually. If you’re interested in learning more about what VirtECS can achieve for your manufacturing plant, one of our planning and scheduling experts would love to answer any questions you have.
by Kelsey H | Feb 8, 2022 | Industry News, Process Improvement
For the better part of a century, pharmaceutical companies have produced their products through batch manufacturing, a process that typically follows a series of steps separated by hold times, off-site quality checks and complex equipment setup. Because batch manufacturing is a natural evolution from bench size manufacturing and government regulations called for strict product integrity, it became standard practice across pharmaceutical companies.
However, in recent years, experts have started recommending that pharma manufacturers shift to a continuous production model. In many other industries, continuous schedules have already been implemented with impressive results, helping plants increase output and respond quickly when the market changes, among other benefits. It makes sense, then, that the FDA and other government agencies have encouraged pharma plants to consider switching to a continuous approach as well.
A More Efficient Method
Perhaps the most significant advantage of a continuous production model is its increased efficiency. Unlike batch manufacturing, continuous processes don’t require hold times between production steps. Hold times range in length, but for some manufacturers, they involve moving product to other facilities and performing multiple tests to ensure quality. Consistently stopping and starting production also adds more time-consuming steps to the process, which are common sources of delays and human errors. By eliminating or minimizing hold times, continuous manufacturing can cut hours, days, or even weeks from total production time without sacrificing product quality.
It’s worth noting that the transition to continuous production can be logistically challenging, costly, and time-consuming. For certain pharmaceutical processes, there’s also still equipment or technology missing from continuous models that would be needed to complete production. However, the total time savings and revenue increases associated with switching to continuous production has already proven its worth to a number of pharmaceutical companies, including Pfizer and Eli Lilly, who have implemented continuous production at plants in recent years.
Increased Productivity and Flexibility
As is evident in its name, continuous manufacturing naturally allows your plant to produce more product in the same amount of time. There are a multitude of benefits associated with increased output, including more product to sell and distribute, increased availability of the pharmaceuticals, and less chance of a shortage. As the current pandemic has clearly illustrated, it’s critical for patients’ health to have pharmaceuticals widely and quickly available as soon as they’re needed.
Continuous manufacturing also allows for more flexibility within pharmaceutical manufacturing. By building around steady-state processes, many of the variables of traditional batch manufacturing, such as titer, are more tightly controlled. This consistency creates the opportunity for improvements in process efficiency and automation, increasing overall asset utilization and process throughout.
If your organization is considering making the switch to continuous manufacturing, an optimization tool like VirtECS is a key instrument in analyzing the opportunity and impact of switching to a continuous production schedule. If there are potential roadblocks standing in the way, VirtECS will uncover them and help you find the most efficient path forward when creating schedules within this new paradigm. VirtECS has been and continues to be used by several pharmaceutical manufacturers, and over the years, our team has developed a deep understanding of the unique challenges these plants face when optimizing production. If you’re interested in learning more about using VirtECS at your pharmaceutical plant, one of our experts would be happy to chat with you.
by Kelsey H | Jan 19, 2022 | Industry News, Process Improvement
All manufacturing companies can appreciate the need to meet the bottom line, but assembly manufacturers often feel this pressure more than others. Compared to others, assembly manufacturers tend to operate on particularly narrow profit margins. In fact, according to data from Sageworks, semiconductor and electronics assembly manufacturing is among the least profitable industries in the US.
Between the nature of working with a high volume of small parts and recent instability in the market, assembly manufacturing is up against several unique financial challenges. Follow along with us as we dive into the reasons behind the industry’s traditionally narrow margins, and a potential new avenue to add incremental yet valuable improvements.
High Fixed Costs
Because assembly manufacturing involves producing multiple small, detailed parts that make up larger products, each plant must be equipped with the necessary equipment for each part and each step of its production process. If the plant is going to produce multiple products, the initial investment can quickly become extremely costly, requiring millions in capital upfront. Though the investment is a fixed cost that won’t continue over time, it can cut into margins in the first few years as the plant gets up and running.
In addition to upfront capital, assembly companies also have to invest in research & development to ensure they’re producing the best products in the most effective manner. Without a commitment to R&D, the company risks falling behind competitors and losing out on market share as a result. However, developing improvements for every individual assembly part can make it an even more time-consuming and expensive process than it is for other manufacturing sectors.
Fluctuating Demand & Price Competition
Prior to 2020, demand for assembly components had been declining, which had already led to excessive inventory and tough price competition. As we discussed earlier, assembly manufacturing can be costly, and each individual part doesn’t generate a large profit on its own. Instead, manufacturers rely on selling a large volume to turn a profit. When the company is forced to sit on inventory it can’t sell or cut the already-low price of each part, it can substantially impact already-tight margins.
Now, as we continue to battle the COVID-19 pandemic, manufacturers have been dealing with capacity restrictions and understaffing. Those obstacles, combined with frequent shipping delays, have often resulted in global shortages of many products. At the same time, consumers have been rushing to purchase the goods they need to adjust to their ever-changing conditions. Suddenly, these manufacturers can’t keep up with the increased demand or get enough product on store shelves. These constant fluctuations in demand have made it particularly difficult to accurately plan production.
When up against such narrow margins and challenging circumstances, even incremental improvements to assembly processes make a significant impact and produce remarkable benefits over time. VirtECS can help assembly manufacturers optimize their production schedule to get the most out of each second of time used and every dollar spent. Those benefits will only compound with every finished product in the months and years to come. If you’re interested in learning more, one of our experts would love to talk to you about how VirtECS can specifically produce results for your assembly manufacturing plant.
