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Agile manufacturing is an emerging strategic approach that focuses on a few key principles. These include flexibility, rapid response, collaboration and continuous improvement. Agile manufacturing is a term applied to an organization that has created the processes, tools, and training to enable it to respond quickly to customer needs and market changes while still controlling costs and quality. It is mostly related to lean manufacturing.
Originally based on agile development from the software development industry,it seeks to draw inspiration into the realm of production and operations management. The goal is to create a manufacturing system that can quickly and efficiently respond to changes in customer preferences, market trends and other external factors. It originated from the Iaccoca Institute of Lehigh University in 1991.
An enabling factor in becoming an agile manufacturer has been the development of manufacturing support technology that allows the marketers, the designers and the production personnel to share a common database of parts and products, to share data on production capacities and problems—particularly where small initial problems may have larger downstream effects. It is a general proposition of manufacturing that the cost of correcting quality issues increases as the problem moves downstream, so that it is cheaper to correct quality problems at the earliest possible point in the process. Another enabling factor for it is the increase in global competition amid market changes and diminishing national barriers.
Agile manufacturing is seen as more than just a hybrid methodology of its predecessors. It is often misinterpreted as a follow up to Lean manufacturing. The key difference between the two is like between a thin and an athletic person, agile being the latter. One can be neither, one or both. In manufacturing theory, being both is often referred to as leagile. According to Martin Christopher, when companies have to decide what to be, they have to look at the customer order cycle (COC) (the time the customers are willing to wait) and the leadtime for getting supplies. If the supplier has a short lead time, lean production is possible. If the COC is short, agile production is beneficial.
Agile manufacturing is an approach to manufacturing which is focused on meeting the needs of customers while maintaining high standards of quality and controlling the overall costs involved in the production of a particular product. This approach is geared towards companies working in a highly competitive environment, where small variations in performance and product delivery can make a huge difference in the long term to a company's survival and reputation among consumers. Agility has been defined, in terms of outcomes, as “dynamic, context specific, aggressively change embracing and growth oriented…succeeding winning profits, market share and customers” [1]
Agile manufacturing involves 4 major concepts that make up the gist of it. These are
Core competence is associated with the workforce and the product and it is identified at two related levels: the individual and the firm. The individual's core competences include skills, knowledge, attitude and expertise. These can be upgraded and refined via investments in training and education. The people of an organization are considered to be critical resources in an organization. [2]
Core competence is derived from corporate wide learning process, integration of diverse skills and streams of technologies, work organization, creation and delivery of value and capability of inter organizational cooperation. [3] For strategic importance and long-term benefits, core competence should provide multi-venturing capability, access to a wide market spectrum, enrich customer valuing, and be difficult for competitors to copy. [4]
It is challenging to build core competencies but it is up to the management to do so. The management should list the company's main capabilities and identify missing links. They should then either in source them or acquire them thru alliances (even if it has to be with competitors). Cooperation and competitors are compatible in the agile framework. Cooperation is of the utmost importance since it provides a platform that enables rapid response times. The advent of the internet allows for physically dispersed personnel to collaborate with ease via virtual corporations.These virtual corporations also help with the availability and velocity of competence carriers in alliances. [5]
The virtual enterprise is different from the traditional corporate alliance. There are three levels of cooperation among enterprises lead to virtual partnership. The stages are as follows
A virtual partnerships enables harnessing and coordination of resources and diverse skills for manufacturing products quickly and facilitates customer involvement in the web of firms. But there are challenges in achieving the 3rd stage. Some key business processes are still poorly understood and ill defined, despite the availability of technology. Furthermore there is a need for techniques to manage companies promoting workforce initiative and performance measures for self-directed, inter-enterprise project teams. [6]
The method to operationalize virtual enterprise is different for each scale of company. Big corporations can reorganize business units and refocus on core competences to operate as a virtual enterprise. Small companies can collaborate to deliver quality, scope and scale collectively. SMEs can potentially exploit agile principles thru rapid partnership formation.
But this is easier said than done. There is still a lack of clarity on how to become agile, with insufficiently developed mindset, underdeveloped business practices, processes, methods and tools.
Agile enterprises need to be able shift focus, diversify and configure and re align their business to serve a particular purpose rapidly since windows of opportunities do not stay open for long. In order to do that they need to develop a strategic architecture that includes a corporate wide map of core skills. This will enable it to be swift by getting the market before competitors with new products and pro activity. For this operational reconfiguration is necessary to capitalize on the strategic architecture. Management must nurture operational flexibility at the plant level. But this should not be at the cost of excessive premium on technology. Managers should not consider new technology to provide a competitive advantages just because it is new. [7] [8]
Knowledge includes include experiences of people in the organization, company reports, case histories, databases and other repositories [9] In order for organizations to become agile, organizations, they need to focus on building knowledge bases and cultivating a well trained and motivated workforce. Such an organization is driven by knowledge and information available and possessed by the workforce. This epitomizes the notion that `knowledge is power'. "The ability to control the new product introduction process from the conceptualization and design stages through manufacturing to shipment and product support requires the exploitation of a knowledge-rich work force and sophisticated information technology in most industrial sectors" [10]
This concept is closely related to lean manufacturing, in which the goal is to reduce waste as much as possible. In lean manufacturing, the company aims to cut all costs which are not directly related to the production of a product for the consumer. Agile manufacturing can include this concept, but it also adds an additional dimension, the idea that customer demands need to be met rapidly and effectively. In situations where companies integrate both approaches, they are sometimes said to be using "agile and lean manufacturing". Companies which utilize an agile manufacturing approach tend to have very strong networks with suppliers and related companies, along with numerous cooperative teams which work within the company to deliver products effectively. They can retool facilities quickly, negotiate new agreements with suppliers and other partners in response to changing market forces, and take other steps to meet customer demands. This means that the company can increase production on products with a high consumer demand, as well as redesign products to respond to issues which have emerged or will emerge in the open market.
Markets can change very quickly, especially in the global economy. A company which cannot adapt quickly to change may find itself left behind, and once a company starts to lose market share, it can fall rapidly. The goal of agile manufacturing is to keep a company ahead of the competition so that consumers think of that company first, which allows it to continue innovating and introducing new products, because it is financially stable and it has a strong customer support base.
Companies that want to switch to the use of agile manufacturing can take advantage of consultants who specialize in helping companies convert and improve existing systems. Consultants can offer advice and assistance which is tailored to the industry a company is involved in, and they usually focus on making companies competitive as quickly as possible with proved agile techniques. There are also a number of textbooks and manuals available with additional information on agile manufacturing techniques and approaches.
Another approach was developed combining the attributes of agility together with leanness across one supply chain is the hybrid lean-agile strategy. This blended lean-agile strategy hybridizes attributes of leanness (cost minimization, waste reduction, continuous improvement), agility (speed, flexibility, responsiveness) and leagility (mass customization, postponement) in one supply network. It is more efficient than the either lean or agile manufacturing processes alone. [11] The significance of the hybridized lean aspect is higher upstream the supply chain than the agility dimension in the same supplier node, compared to downstream the supply chain at the distributor node closer to the customers, which operates in a more agile manner. [12]
Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suite of integrated applications—that an organization can use to collect, store, manage and interpret data from many business activities. ERP systems can be local-based or cloud-based. Cloud-based applications have grown in recent years due to the increased efficiencies arising from information being readily available from any location with Internet access.
In commerce, supply chain management (SCM) deals with a system of procurement, operations management, logistics and marketing channels, through which raw materials can be developed into finished products and delivered to their end customers. A more narrow definition of supply chain management is the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally". This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.
A supply chain, sometimes expressed as a "supply-chain", is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers. Meanwhile, supply chain management deals with the flow of goods within the supply chain in the most efficient manner.
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.
In business, a competitive advantage is an attribute that allows an organization to outperform its competitors.
A core competency is a concept in management theory introduced by C. K. Prahalad and Gary Hamel. It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace" and therefore are the foundation of companies' competitiveness.
Competitive analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context to identify opportunities and threats. Profiling combines all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment.
In industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from its inception through the engineering, design and manufacture, as well as the service and disposal of manufactured products. PLM integrates people, data, processes, and business systems and provides a product information backbone for companies and their extended enterprises.
A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations.
Quality management ensures that an organization, product or service consistently functions well. It has four main components: quality planning, quality assurance, quality control and quality improvement. Quality management is focused not only on product and service quality, but also on the means to achieve it. Quality management, therefore, uses quality assurance and control of processes as well as products to achieve more consistent quality. Quality control is also part of quality management. What a customer wants and is willing to pay for it, determines quality. It is a written or unwritten commitment to a known or unknown consumer in the market. Quality can be defined as how well the product performs its intended function.
Demand-chain management (DCM) is the management of relationships between suppliers and customers to deliver the best value to the customer at the least cost to the demand chain as a whole. Demand-chain management is similar to supply-chain management but with special regard to the customers.
The following outline is provided as an overview of and topical guide to business management:
Co-creation, in the context of a business, refers to a product or service design process in which input from consumers plays a central role from beginning to end. Less specifically, the term is also used for any way in which a business allows consumers to submit ideas, designs or content. This way, the firm will not run out of ideas regarding the design to be created and at the same time, it will further strengthen the business relationship between the firm and its customers. Another meaning is the creation of value by ordinary people, whether for a company or not. The first person to use the "Co-" in "co-creation" as a marketing prefix was Koichi Shimizu, professor of Josai University, in 1979. In 1979, "co-marketing" was introduced at the Japan Society of Commerce's national conference. Everything with "Co" comes from here.
Lean IT is the extension of lean manufacturing and lean services principles to the development and management of information technology (IT) products and services. Its central concern, applied in the context of IT, is the elimination of waste, where waste is work that adds no value to a product or service.
A minimum viable product (MVP) is a version of a product with just enough features to be usable by early customers who can then provide feedback for future product development.
Lean enterprise is a practice focused on value creation for the end customer with minimal waste and processes. The term has historically been associated with lean manufacturing and Six Sigma due to lean principles being popularized by Toyota in the automobile manufacturing industry and subsequently the electronics and internet software industries.
Capability management is the approach to the management of an organization, typically a business organization or firm, based on the "theory of the firm" as a collection of capabilities that may be exercised to earn revenues in the marketplace and compete with other firms in the industry. Capability management seeks to manage the stock of capabilities within the firm to ensure its position in the industry and its ongoing profitability and survival.
Lean product development (LPD) is an approach to product development.
Media management is a business administration discipline that identifies and describes strategic and operational phenomena and problems in the leadership of media enterprises. Media management contains the functions strategic management, procurement management, production management, organizational management and marketing of media enterprises.
The Business Model Canvas is a strategic management template used for developing new business models and documenting existing ones. It offers a visual chart with elements describing a firm's or product's value proposition, infrastructure, customers, and finances, assisting businesses to align their activities by illustrating potential trade-offs.
