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.
