Maintain Flexibility
As a result, preventing future crises may necessitate expenditure on the maker’s side. Building and maintaining flexibility across all manufacturing units take a lot of work. Still, it’s all worth it when you can quickly pivot in the face of shifting circumstances.
Assume COVID measures or a natural disaster in one nation temporarily halt the production of a key product. If it’s the only place a manufacturer can make that product, they’re left with a backlog of back orders, looming shipping issues, and dissatisfied consumers.
Nevertheless, if the business can swiftly switch one of its plants to another country to produce that essential product, it will be a small problem. The ability to assure important clients that there would be no or minimal delay in completing their orders may involve a significant upfront investment in equipment that is idle for a considerable time, as well as specific training for employees.
In some circumstances, it may make financial sense to temporarily create items at factories abroad and export them to overseas markets, whether due to decreased shipping costs, favorable exchange rates, or higher demand.
The manufacturer can quickly adapt to changing conditions if those offshore factories have the capacity to make the switch in a few days.
Don’t Stop Innovating
Innovation is essential to staying competitive. Nevertheless, innovation is risky by definition. It’s not risky, though, as not trying to innovate. There are strategies to reduce risk while integrating innovation into a long-term plan to achieve the best of both worlds.
Giving a new supplier a chance to supply production materials is one simple way. You can either source a material you manage without for a short while or double-purchase it for one or two shipments while keeping your current supplier on board.
It may turn out that the new supplier can provide superior pricing, service, or some other intangible, making working with them the best option moving forward. Perhaps you could discover that your present provider serves you better. At the very least, you now know, and it didn’t cost you anything to find out.
Little changes that are successful can lead to much larger ones. You may invest time and effort in reviewing a production process or a specific piece of equipment to see if you can improve its efficiency by only 10-15%.
If you realize you can do so quickly, it signifies you’re producing more and faster and can afford to analyze other elements of your business or develop a new product. It will be well worth the risk if you keep in mind that any innovation should solve your clients’ unmet demands.
Testing Your Operations
Stress-testing your operations, whether new or old, is an excellent approach to determining whether they are risk-free. This may be accomplished using a risk management checklist or a Failure Mode and Effect Analysis. An FMEA entails analyzing a design or process, reviewing a safety checklist, visualizing how the design or process may fail, and estimating the risk priority of that design or process.
An FMEA form assists you in calculating the probability of each disaster you propose occurring. With that information, you may implement some risk mitigation measures, test again, and recalculate the risk priority ratings.
If you make the necessary changes, the scores should be significantly lower. Continue to do these reviews regularly to determine if anything has changed and if any new risk factors have emerged. It’s a lot of effort, but it’s far preferable to the aftermath of an unexpected and unaccounted-for disaster.
This applies to internal factory operations that the manufacturer can control and external factories, such as natural catastrophes. Analyzing the chance that such a calamity may disrupt operations, and from there, you may focus on developing an emergency plan and conducting exercises to train management and floor staff to respond calmly when disaster strikes.
Business is risky, and success comes from planning properly and minimizing risk when you dare to do more, not from attempting to avoid risk entirely.
