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Diversification offers a serious competitive advantage

11 June, 2021
The last twelve months has demonstrated that the ability to diversify product offerings can provide a serious competitive advantage
The last twelve months has demonstrated that the ability to diversify product offerings can provide a serious competitive advantage

Companies who have had the ability to diversify their product offerings over the last twelve months have reaped the benefits by having a serious competiive advantage, but why are so many manufacturers struggling to adapt? Martyn Williams explains.

During the last year, manufacturing has experienced its biggest change since the industrial revolution, albeit not intentionally. The pandemic revealed the delicate nature of industry’s supply chains, forcing some manufacturers to rethink their output or stall operations entirely. Meanwhile, others captured the opportunity to shift their product lines to suit the needs of the climate.

Independent brewer, Brewdog, transformed from a craft beer manufacturer to an NHS-approved supplier of hand sanitiser, using its distillery to produce 100,000 units of hand sanitiser in just two weeks. Automotive manufacturers begun producing ventilators and industrial 3D printers were used to create PPE and other safety equipment. Similarly, pharmaceutical manufacturers were forced to ramp up production and manufacture under higher pressure than ever before.

However, you could argue that these large manufacturers have the capacity and resources to adapt, change their facilities and shift their focus. For small and medium-sized manufacturers, diversification isn’t as simple.

Supply chain diversification

More often than not, diversifying product lines requires investment in new equipment, processes and suppliers. Even for somewhat comparable manufacturers and products, like an alcohol-based sanitiser and a distillery, changes are necessary. Brewdog, for instance, was forced to rethink the planned packaging of its hand sanitiser when container supply became difficult. Due to low stock of sanitiser bottles, the brewery reused use small beer bottles as containers.

Supply chain diversification in particular, has become a glaringly obvious need in the last twelve months. The pandemic first demonstrated the problem of relying on one geographical region for supply, but it has been the colossal disruption of Brexit at the beginning of 2021 that has amplified this message in the United Kingdom.

Manufacturers need flexibility in their supply chains to be resilient to these disruptions. While the traditional, longstanding manufacturer-supplier relationship may seem idyllic, a data-based approach is much more suitable in today’s environment.

With increasing volumes of data available in this area, manufacturers should consider integrating their own enterprise resource planning (ERP) systems, such as SAP and Microsoft Dynamics, with supply chain data. Independent software platforms can make this communication straightforward, providing manufacturers with at-a-glance monitoring of which products are available, where from and for how much.

That said, it is not just supply chain management that requires change. Product diversification often requires changes to production lines.

Diverse communication

One of the biggest roadblocks to product diversification is the age of industrial equipment. Often, manufacturing facilities are operating with production lines that are several decades old — great news about the equipment’s quality, but bad news for flexibility. While changing output doesn’t always necessitate a complete equipment overhaul, even small changes can have consequences for the rest of the plant.

Let’s consider a pharmaceutical manufacturing plant as an example. The plant has operated on a production line from a specific original equipment manufacturer (OEM) for its entire lifespan. The bowl feeders, conveyors, packaging machines and other automation equipment are all of the same manufacturer, age and communication protocol. Should the manufacturer wish to integrate a new piece of equipment onto the line, such as aseptic filling machines for the production of a vaccine, the plant manager must consider whether this integration is possible.

A common challenge is ensuring new equipment can communicate with the existing stock. Not only is this important for programming, but it is crucial for sectors that rely on maintaining data integrity across their facilities, such as pharma.

Older machinery is often provided with proprietary software, causing limitations for integrating machinery from other brands. Again, industrial software platforms that are deployable across multiple communication standards can solve this problem – without the need for expensive equipment overhauls.

Using this method, manufacturers can make straightforward additions to their facility, unlocking the potential to create new products and diversify their output. However, this isn’t the only solution. Now, manufacturers are seeking ways to ensure flexible production is facilitated in the long term using modular production.

Flexible factories

Modular production describes a manufacturing line that can be split into segments or modules. This allows a facility to be broken down into separately functioning, smaller production lines while creating opportunities to reformat the line where necessary. Examples of modular production lines can be found in large-scale automotive facilities, in which modules can physically be wheeled in and out of place to enable a fully flexible production line.

In automotive, this is largely used for customisation requests. Using this method, a plant can easily manufacture a series of vehicles in the standard style, but can change over to a new module when specific customisation is required. For instance, applying a different paint colour for a vehicle’s roof or installing a premium version of a dashboard.

Modular production can also allow for product diversification in other industries. Customised medicine in pharmaceutical manufacturing is one example, but almost every manufacturing sector could improve flexibility using this method.

However, for modular production to be effective, each module must be able to communicate through the same protocol and importantly, the data generated must be visualised in a uniform way. Not only does this reduce the need for programming time with each new set-up, but it also ensures each production run will adhere to the regulations of each industry. Again, pharmaceutical manufacturing is a prime example.

Despite its high level of innovation in the sector, the manufacturing industry finds change difficult. If the last twelve months have taught us anything, it’s that flexibility is key to ensuring resilience during unexpected times. And importantly, diversification of supply chains, product lines and production methods are key to ensuring this flexibility.

Whether manufacturers are required to adapt to produce essential goods like sanitiser, PPE and medical equipment or, like in much simpler times, they want to gain a competitive edge through new products lines and supply chains. Looking to the future, diversification will be non-negotiable.

* Martyn Williams. is managing director of industrial software expert COPA-DATA UK

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