Managing Automation - January 2009 - (Page 27) Business Success Demands a Strategy to Increase Agility To get an expert’s view of the state of agility in manufacturing, MA Senior Editor Stephanie Neil e-mailed with Sudhir Menon, senior manager at Deloitte Consulting, LLP . Although most companies do not realize it, they are constantly being pushed to become more agile by customers or dynamic business conditions. The companies that succeed are the ones that recognize this reality and develop strategic plans, enable execution capabilities, and execute strategic flexibility to separate themselves from their competition. Business leaders will realize the importance of agility when the penalties of not being agile translate into business impacts. reactive decision making. The second barrier is traditional accounting and profitability analyses. The current accounting practices at most companies are more suitable to limited variability and long production runs. Third is a limited understanding of true end customer requirements. Instead, assumptions about end customer requirements are coincidentally most suited to current manufacturing capabilities. Fourth is organizational inertia and complexity. Too many layers of management as well as process and policy complexity do not support quick decision making and change. Fifth is the lack of collaboration. Many value chains have not achieved a level of collaboration among the different contributors to achieve nimble decision making, reduction of waste, and value to the end customer. Do you see any significant differences between large companies and small/medium-sized businesses in their ability to become agile? Q: What do you think the top three business drivers are behind agility? A: Agility is no longer an option. It is a necessity driven by the fact that the “world is flat.” Customers are global and the competition and technology are not bound by geography. Agility needs to be top-of-mind for companies to satisfy masscustomization of customer requirements; have the flexibility to adjust the production network to optimize on a global basis; and increase asset effectiveness and enable virtual value chains. How important is technology in enabling agility? Q: Q: A: What is the state of “agility” in manufacturing? How do you define it? Q: A: Technology is an important enabler of agility as it can provide near real-time status on performance, support simulations and decision making, and [facilitate] collaborative product design with manufacturing. A: I view agility as speed and flexibility that are guided by strategic direction. It is also the ability to be nimble — the ability to sense changes, select predetermined alternatives, and execute effectively. The potential of agility can be significant since it can help organizations meet the individual requirements of a large and varied customer base at the lowest cost while utilizing the fewest assets. It also enhances the capability of companies to execute quickly on strategic alternatives when confronted by changes in the business environment. Smaller companies that have undergone significant competitive inflection points have adopted agile practices. Larger companies have been successful in implementing agility in pockets. The big opportunity is to scale up these limited-size implementations by enabling larger companies to behave like their smaller competitors. Q: What are the business barriers to agility? First, there’s the lack of an executable strategy. Companies have a highlevel vision to become agile, but usually this is not translated into execution. The link between the strategy and execution is usually weak. In most cases, the strategic intent is lost in day-to-day firefighting, addressing localized constraints, and Where will the concept of agility be three years from now? Agility as a requirement will only continue to grow as customers and competitors evolve. Companies will take different routes to become agile. New business models for new entrants; spin-offs for larger players; smaller, nimble companies acquiring larger companies; and changing business practices are but a few. Q: A: A: 27 January 2009
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