We believe manufacturing will remain an important sector in the economy, even though employment in the manufacturing sector will continue to shrink because of ongoing productivity improvements. We consider manufacturing to be an important pillar within a healthy society for two main reasons: first, many services are directly linked to manufactured products (e.g. sales, customisation, logistics, maintenance contractors and field services) and, second, manufactured goods can be traded internationally much more easily than most service products.

International competition is fierce, and it is tough to survive as a manufacturer particularly in high-wage countries with rapidly increasing ESG (Environment, Social and Government) expectations and legislation. Manufacturers must move faster, but many of them are still implementing methodologies from the first half of the last century such as Lean (1940s) and Six Sigma (1950s) – now combined into Lean Six Sigma (LSS).

LSS is important, but it is only one part of the equation – quality of management is the other part and the key. Manufacturing excellence requires process excellence, which requires managerial excellence, and the two management levels that matter most are the leaders at the top and the first-line supervisors.

    Developing managerial excellence requires:

  • organisational alignment
  • getting the manufacturing strategy aligned with the business strategy
  • getting the structure of the basic business processes right
  • cascading the strategy down to the shop floor
  • installing a powerful performance management system for understanding and acting on quality and productivity drivers
  • a compelling vision on how the plant should look and run – a vision that is co-owned by all
  • quick wins to establish momentum

Maintenance is a value creator rather than a cost generator. For asset-intensive industries, high uptime and reliability are critical to ensure return on assets; for asset-lighter industries, high uptime and reliability are critical in a just-in-time supply chain.

Current digital possibilities provide ample opportunities for Maintenance to play that all-important value-creator role. However, more often than not we see that the basics are just not in place: cooperation between Maintenance and Production is unproductive, mean time between repairs is too short, there is too much corrective maintenance versus preventive maintenance, maintenance backlog is growing, drawings are out of date as are maintenance plans, data is lacking and contractors are underperforming. The effects are too much downtime, unreliable production, low efficiency, high costs, too much working capital and dissatisfied employees.

Before deploying the various digital aids that are on the market nowadays, you must get the basics right. Key elements are:

  • organisational alignment
  • getting the maintenance strategy aligned with the business strategy
  • getting the structure of the basic maintenance processes right
  • fostering a deep and productive cooperation between Maintenance and Production
  • fostering a productive partnership with contractors
  • a powerful performance management system for understanding and acting on quality and productivity drivers
  • knowing what the critical equipment is
  • registering data on equipment behaviour, logging maintenance history and ensuring integrity of data
  • ensuring technical condition of equipment is at the sufficient level
  • ensuring quality execution of corrective maintenance: root cause elimination
  • ensuring timely and quality execution of preventive maintenance routines
  • using condition monitoring of equipment
  • getting the skills and behaviours right

If you already have all this is in place, the equipment performance will already be high and costs significantly lower. Gradually, in line with the growing maturity of the organisation, you can integrate digital aids to achieve the next levels of equipment performance, efficiency and even lower costs: IIoT (Industrial Internet of Things), smart equipment, mobile devices, wearables, digital twin, advanced analytics, predictive maintenance, seamless engineering, etc.

Attaining world-class supply chain management and collaboration means developing and managing supply chains and partnerships so that your company is flexible and resilient, with response times and delivery performance that will beat the competition.
Future supply chains need to cope with the long-term trends of mass customisation, ever shorter life cycles and the more recent volatile conditions that are here to stay. In these market conditions, many companies will benefit from a “smart” supply chain, which combines the drive to eliminate waste (i.e. anything that doesn’t add value) with agility and responsiveness (i.e. the ability to handle unpredictability with speed and flexibility).

A smart supply chain enables fast, flexible supply of tailor-made products at competitive cost levels. It excels in having few product and process quality issues, reduced operational costs, increased flexibility, and high internal process speeds. It integrates customers and business partners to create value in both the primary and support processes.

Building a smart supply chain requires a holistic approach that integrates product and process design, organisation design, and digital solutions:

  • an unambiguous supply chain strategy
  • product configuration for late postponement
  • processes that are aligned with strategy and designed for minimal order cycle times
  • a flat organisation with multidisciplinary teams and no silos
  • integration with partners throughout the supply chain
  • an aligned performance management system with real-time information from the end-to-end process
  • supply chain visibility with the ability for stakeholders throughout the supply chain to access real-time data related to the order process, planning, inventory, delivery and potential supply chain disruptions

Disciplined cash and working capital management drives good operational and financial performance. However, performance in order to cash, inventory management and procure to pay  slumped over the 5 years prior to the COVID outbreak. A closer analysis reveals that inventory optimisation poses companies the biggest challenge – both in volatile and non-volatile markets. More Cash – Lower Inventory – Better Service, good inventory management is the key.

DELIVER DOUBLE DIGIT INVENTORY REDUCTIONS AND MAINTAIN OR IMPROVE SERVICE LEVELS

Decades of experience have taught us that going straight for the inventories themselves is both the quickest and the surest way of delivering a high-performing supply chain. Inventory sits right at the heart of your supply chain and is both a symptom and cause of your supply chain performance. Getting inventory right keeps your customers happy, increases flow and reduces cost and waste and frees up cash.

At Axisto, we combine the practical business focus of management consulting with the high-speed analytical capability of advanced information technology. We rapidly distil practical insights from data in Enterprise Resource Planning (ERP) systems. Our people concentrate on the human challenges of implementing and sustaining resilient and lean supply chains.

Our unique approach to supply chain puts inventory optimisation front and centre. This allows us to help deliver double digit reductions in inventory while maintaining or improving service levels – at speed in a low risk manner compared to traditional approaches.

OUR INVENTORY MANAGEMENT PROPOSITIONS

Axisto provides three inventory management propositions: inventory optimisation programmes, inventory analytics and inventory maturity assessments.

Our starting point with most clients is a quick scan. On the basis of just 3 standard reports from your ERP system, we quantify improvement potential item by item as well as overall. The output is both an immediate high-level quantification of improvement potential and the basis of a road map to deliver sustainable improvements quickly.

INVENTORY OPTIMISATION PROGRAMMES

We provide expert analytics and effective change management backed up by a clearly measurable business case. Improvements to inventory positions of 20% or more, sometimes much more, are usually achievable within the first year, at a high return on investment.

 INVENTORY ANALYTICS

Do you find it difficult to really understand what your inventory data is telling you, or what you should do about it? Do you have optimisation tools that are difficult to use or which give results you know to be wrong, but you’re not sure why? With the proprietary technology that we use, we provide clients with rapid actionable insights into their inventory data.

In addition, we help clients with a range of targeted analytical exercises, ranging from strategic inventory positioning (where in your supply chain should you hold inventory?) through to setting inventory policies for items that are hard to optimise, such as spare parts, or make to order products.

INVENTORY MATURITY ASSESSMENTS

Inventory is influenced by almost every aspect of your business. Therefore, it can be hard to know at an enterprise level where the biggest opportunities for further improvement are, or how you compare to your competitors.

Axisto can take the temperature of your inventory management. We combine a granular, bottom-up quantitative assessment of your potential for improvement with a qualitative overview of your people, processes and systems, including relevant benchmarks, to give you actionable insights into where to find the next step change in your performance journey.

A CASE

CHALLENGE

A medium-sized industrial manufacturing firm with a strong market position and profitability had little historical focus on inventory. The consequence was that inventory was increasing gradually. It was time to act.

RESULTS

Inventory was reduced by more than 50% from the initial baseline over a period of 3 years, while service levels were maintained or improved. Improvements in the underlying data led to a better understanding of how and why to act – inventory management capability was significantly developed within the client’s teams.

SOME QUOTES

“We finally have full transparency of what we have, so we can make fact-based decisions on a weekly basis.” – Automotive manufacturer

“Since starting a programme, we have reduced our inventories by over 50%.” –  Industrial manufacturer

“The results are exceptional and have made a major difference to our cash flow.” – Global manufacturing company

“The inventory programme brought a wide range of process issues into sharp focus, with an impact much broader than just inventory.” – Market-leading manufacturer