Why Companies Are Investing In Flexible Manufacturing

Enric Asunción, cofounder and CEO of Wallbox.

The global Covid-19 pandemic and the Russian invasion of Ukraine have caused worldwide disruptions in supply chains. These unprecedented circumstances show no signs of resolving in the near future, and many business leaders and shareholders are calling for a reimagining of how companies manage their supply chains.

In earnings calls of major companies for the third quarter of 2021, “Bank of America also noted mentions of ‘supply chain’…had risen an astonishing 412% from Q3 2020 and 123% from Q2 2021 earnings calls, when boardroom focus on the issue was already red hot,” according to a report by the World Economic Forum.

Meanwhile, according to a recent McKinsey report, a single prolonged supply shortage to manufacturing could wipe out 30% to 50% of a traditional company’s earnings. The current inflationary scenario is also in part due to supply chain shortages.

So what can companies do to better protect their manufacturing flow in light of these supply issues? Increasing initial spending on research and development to create a variety of product designs that account for a shortage in critical parts while still achieving the same functionality will be a key component for successful companies going forward. Identifying core components of a product and coming up with a plan B, plan C and beyond has become a necessary strategy for product design and manufacturing.

It is also essential to integrate and develop strong predictive models to help navigate future shortages. Of course, such models are not easy to build and require multiple statistical variables as input, but there are AI-based and systems-based approaches that can help leaders effectively plan for otherwise unforeseen challenges.

With different product designs that account for varying resources, companies must also increase their relationships with suppliers, forming a diverse network while maintaining regular communication. Companies that have their finger on the pulse of global supply chains and can pivot quickly to secure necessary resources will give themselves a competitive advantage in the marketplace.

Additionally, according to McKinsey, “59% of companies say they have adopted new supply-chain risk management practices over the past 12 months.” In fact, we’re seeing more and more manufacturing facilities opening in the United States by companies who are taking every step possible to ensure that they can serve the world’s richest economy.

The benefits of creating a vertical supply chain—which means handling everything in-house from design to manufacturing, production and everything else in between—have never been more important to reducing business risk.

As we see today, supply chain issues will continue to be a significant risk to doing business for the foreseeable future. The paradigm of fully flexible manufacturing allows companies to deal with supply chain challenges while retaining maximum customer satisfaction. We believe that consumers will pay a premium in the future for the proper availability of products.

The supply of resources continues to be a major issue for manufacturers, but through innovative and flexible design, companies can ensure that their products are able to work with available resources to dampen the impact of a lack of inventory from suppliers. The old ways of doing business have gone out the door, ushered in by a new world and ways of living that the global pandemic and international unrest have spurred on. Companies and their leaders must adapt to the times to ensure the health of their business.

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