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"JOBSCOPE is an Integrated
Manufacturing Information System
for order-driven companies. Our software provides the tools for an online, real-time, job costing and
manufacturing management system to Engineer- to-Order, Make-to-Order, and Repair-to-Order manufacturers
who wish to achieve the status of world class manufacturer."
Source : Jobscope
Successful Manufacturing in a Competitive Market
Competitive Marketing,
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Trends and Strategies for Order-Driven Manufacturers
Executive Summary
The challenges that order-driven manufacturers
consistently face will grow more numerous and complex
every day. Among these challenges are growing
competition, increasing customer demands and the need
to refine business processes.
Order-driven manufacturers face increasing competition.
Today's competition comes from not only domestic
companies, but internationally as well. Global
competition is increasing the pricing pressure felt by all
manufacturers.
Customer expectations continue to increase. They
demand the highest quality products at the lowest
possible cost, and they want their orders when they need
them.
Internal pressures from company stakeholders include
reducing costs and increasing profitability. The continuing
challenge is to do more with less. That means that
business processes need to be analyzed and improved
whenever possible.
Order-driven manufacturers recognize that technology,
when selected and implemented correctly, can help them
meet complex marketplace challenges and create
sustainable competitive advantages.
Top ERP Business Drivers
- Must reduce costs
- Must improve customer response time
- Need to manage growth expectations
Best-in-Class ERP Performance
Companies
- 20% reduction in levels of inventory;
97% accuracy
- 95% manufacturing schedule compliance;
97% on-time and complete shipments
- An average of 3.3 days to close a month
Overview
Today, order-driven manufacturers face numerous
challenges brought on by aggressive competition, market
pressures and attempting to do more with less. Some of
these challenges are similar for all manufactures; while
many are unique to those manufacturers that engineer-to
-order (ETO), assemble-to-order (ATO) and make-to-order
(MTO).
All manufacturers face growing global competition and
pricing pressures. Increasing customer expectations
(quality, price, delivery) and increasing pressure from
internal company stakeholders adds to the list of
challenges that manufacturers must address in order to
remain competitive.
Order-driven manufacturers face many additional
challenges. These manufacturers design and build
complex products based upon specific customer
requirements. Their unique challenges include:
- Creating accurate estimates that are price
competitive, but yet profitable
- Managing the costs associated with each project or
job
- Increasing the collaboration between Engineering
and Production
- Servicing customers after their products have been
delivered
Trends
There are three major trends that order-driven
manufacturers are facing today. These include increased
global competition, rising customer expectations and
internal stakeholder demands to lower costs and increase
profitability.
Global competition - this trend is continuing from the
end of the last century. The world is shrinking.
Technology, the Internet in particular, has made it easier
to do business across boarders.
Order-driven manufacturers not only have to contend
with their domestic competitors, but with competitors
worldwide. Due to the nature of today's logistics
environment, products can be shipped overnight from
anywhere in the world. This new level of competitiveness
is creating pricing pressure for order-driven
manufacturers. In order to compete successfully and get a fair price, companies are looking to differentiate
themselves by providing higher quality, shorter leadtimes
and better service to their customers.
Rising Customer Expectations - customers are becoming
increasingly sophisticated in their use of technology.
They use the Internet to find the best prices and sources
for the products they need.
Customer expectations are at an all time high. They
demand that the products they order are of the highest
quality. They expect those products to be delivered ontime
and they expect to get them for the lowest possible
price.
Additionally, customers are looking for vendors that
provide superior customer service. This includes
aftermarket services, such as the availability of spare
parts, warranty information and field service support.
Internal Stakeholders - company stakeholders are
becoming increasingly demanding as well. Increasing
competition and customer demands have made it more
difficult for order-driven manufacturers to retain their
profitability levels of the past.
In order to remain competitive, order-driven
manufactures need to produce high-quality products and
deliver on-time to their customers. And, to remain
profitable, order-driven manufacturers need to control
their costs.
Controlling costs is a difficult task for these companies.
These manufacturers face many unique processes
compared to make-to-stock and process oriented
manufacturers.
First, order-driven manufacturers must create an
estimate of the project, or job, they are bidding on. This
requires a great deal of effort and time on the part of
engineers, technical staff and sales. This is one of the
main costs for order-driven firms.
Next, order-driven manufacturers are typically working
on projects, or jobs, with long lead times and complex,
deep bills of materials. Often, customers change their
requirements and specifications. This results in
engineering changes and sometimes material changes.
This is another main cost area for order-driven firms.
Strategies
Although the trends and challenges presented in this
paper may seem insurmountable, order-driven
manufacturers can still compete and thrive in today's
marketplace.
There are two main areas for these companies to focus
on: business processes and technology.
Business Processes - most manufacturers are operating
with business processes that pre-date the challenges they
face today. In many cases they are more than 20 years
old, or haven't been changed since the inception of the
firm (i.e. we've always done things this way!).
Order-driven manufacturers should look at all of their
business processes to see where improvements can be
made. If the internal expertise to self-perform does not
exist, then external resources should be considered.
Outside resources include associations such as APICS
(www.apics.org), or the National Association of
Manufacturers (www.nam.org) are available to help.
These associations offer self-help and recommendations
for consultants that will help you map and enhance your
processes.
For order-driven manufacturers, the key processes to
review are the ones that offer the highest possible
opportunities for reducing your costs. These include:
- Estimating and quoting
- Job set-up and control
- Real-time job costing
- Work center throughput
- Labor productivity
- Engineering changes & standardization issues
- Inventory management & control
Many manufacturers have, or are in the process of,
implementing Lean or Six Sigma as a way to re-engineer
their processes - with the goal being overall improved
operations. These initiatives put a customer-oriented
focus on where to improve operations and reduce costs.
Technology - the use of technology is increasingly
important in any strategy to improve processes and
reduce costs. Order-driven manufacturers would
significantly benefit from the use of technology due to
the complex nature of their businesses.
The one caveat to technology is that it needs to support
the mission and processes of the firm using it. For orderdriven
manufacturers, this means selecting technology
that has been designed to accommodate the uniqueness
of these type of businesses.
Many order-driven manufacturers are using older ERP
systems to help manage their businesses. These older
ERP systems were developed around the concept of MRP
(material requirements planning).
According to a recent study in the Wall Street
Journal, 73% of all Manufacturers are dissatisfied
with their current ERP systems.
These type systems are focused on managing materials
and require standard bills and routings. This works well
for high-volume, repetitive and process manufacturers,
but not for order-driven manufacturers.
System Selection
Where does this leave order-driven manufacturers?
Order-driven manufacturers should be sure to select an
ERP system that is designed to support the way they do
business. This means that the ERP solution should be
focused on job estimating, job creation and real-time job
costing.
By defining and documenting project goals from the
beginning, companies will have a roadmap to follow with
clear expectations. IT resources should be evaluated to
determine whether an existing staff will be able to
properly support an ERP implementation.
Today, many companies are taking advantage of
alternative and cost-efficient delivery models such as
those that are provided 'on demand'. The SaaS (Software
as a Service) model gives order-driven manufacturers
comprehensive system functionality, accessibility and
upgrades without incurring the traditional onsite
installation process. Typically, SaaS offers companies a
lower Total Cost of Ownership (TCO) and is often a
quicker ERP implementation.
There are also a number of functionality and vendorrelated
issues to consider to determine whether a system
is right for your business. These include:
- Integrated engineering functions within
manufacturing operations
- Cost analysis (planned versus actual)
- Field services, equipment installations and
warranty information
- Performance views of key manufacturing
processes
- Reference customers
- Vendor's background and longevity in the ERP
market
- ERP training and support programs
And, finally, order-driven manufacturers will want to
develop a cost and ROI model for their project. This
should take into consideration cost for the software
(licensed or on-demand), implementation services,
maintenance fees and upgrades. Influencing these costs
and ROI will be your company's anticipated growth,
business fluctuations, market dynamics and customer
demands.
Top ERP Software Selection Criteria
- Functionality
- Ease of Use
- Total Cost of Ownership
- Ease and Speed of Implementation
- Integration Capabilities
Order-driven manufacturers will likely see increasing
global competitive pressure, advances in technologies
and changing requirements from demanding customers.
These trends and pressure from within the organization
to grow profitably while reducing costs will continue.
With a solid strategy and focus, order-driven
manufacturers can leverage these factors with the right
ERP solution and gain a competitive advantage in today's
marketplace.
About Jobscope
Located in Greenville, South Carolina (US), Jobscope
delivers fully-integrated solutions for engineer-to-order
and make-to-order manufacturers; and maintenance,
repair and overhaul (MRO) businesses. For more than 25
years, customer's using JOBSCOPE have improved ontime
deliveries, materials management and inventories,
data integrity, cost control, job reporting and
communications between management, operations and
finance.
Jobscope Corporation
355 Woodruff Road
Greenville, SC 29607
800.443.5794
For more information, visit www.jobscope.com