The article explores the reshoring of
production out of low labour cost sites to a range of Western countries and
introduces the servitization of manufacturing companies to deliver advanced
services, one form of servitization.
Combining the two potential transformations
described above brings a manufacturing operation closer to your critical mass
of people and closer to your customers. Being closer and how you allocate your
resources can be used to maintain the same business model or try and take
advantage of a servitization model offering advanced services. Those services
might include a life cycle support or Rolls Royce pounds of thrust type
solution. Those services might be a game changer in the field, supporting
growth that can only be financially supported by an efficient, fast response,
low in WIP supply chain. The key will be going back to the Voice of the
customers (VOC) to work out what they will buy and how the value can be
provided. That will drive the real purpose of the re-shoring, rather than just
“bring them back home”.
How
Lean helps
With the purpose clear, and the value
understood, now we should look to apply the right Lean tools to deliver a new
value stream map. Consider:
·
The longer the process to be
transferred back the longer each transfer step will be. Look to standardize and
transfer in chunks, keeping the work going through your transfer team at a
manageable level. Consider moving part-manufactured goods for finishing in the
home market. Consider machining parts in the home market and finishing them off
shore. Prove each step is capable first.
·
As-is and future Value Stream
Maps (VSM)s are an obvious tool. Consider, what steps can be removed with
re-design? If products are rented to customers for use then financial
transactions will become flows instead of lumpy one-off transactions. Credit
control and accounts receivable processes will change in size and type. Similarly
by changing to an Advanced Service Business Model the organization structures
and span of control of a business can change
Servitization
and re-shoring need supply chain operations
Servitization clearly puts 'value creation'
and 'value delivery' at the forefront of the competitive strategy. Value
creation is closely related to demand creation and value delivery is closely
related to demand fulfillment. Consequently, the implications of servitization
are not only to the supply chain (demand fulfillment side) but also to where
the demand is created in the first place.
What’s
next?
In my experience almost any business faced
with decisions about re-shoring, changes to business models such as
servitization and lean implementation find themselves stretched. There can be
housekeeping activities required to prepare for such large changes and a
significant amount of “headspace” required to work out what it all means and
how to tackle it effectively and competitively.
So having explored the topic and some ways
to tackle it what are the next steps, where do we go from here? Machan
Consulting is working in association with Professor Tim Baines from the
Servitization Centre at Aston University and Dr. Benny Tjahjono at the Cranfield
School of Management to research
who has done what already and what new entrants need to know.
We are looking for businesses to contact us
with their experiences and what they are hoping to do. With a good enough
response we plan to run a spring 2015 forum at Aston for those volunteer
businesses to share, explore and learn from each other. We also anticipate some
solid research to publish in late 2015 to help the whole sector.
So if you are a manufacturing business that
is:
o Looking to do this, and looking for help/involvement in this project
o Or preparing their structure/organisation for the change
o Or have been there and would like to share their learnings,
