When market shifts prompt a strategic course correction, operational management must be efficient and nimble in response.
Agility has become a requisite for success, particularly in the manufacturing industry. Supply chain disruptions, demand fluctuations, and external pressures like tariffs and geopolitical risk have created a confluence of disruptive forces that require companies to course correct on an increasingly regular basis. The uncertainty created by these forces spans across industries, confirming that in our rapidly evolving global business environment, the only constant is change.
Layered Complexity
Complex organizations become increasingly complex as they grow in size, scope, and geographical reach. The challenges expand when various parts of a manufactured product’s build are outsourced, leaving the parent manufacturer to orchestrate the supply, delivery, and storage of parts in concert with the build program.
Shifts in consumer demand, supply and other disruptions add another layer of complexity.
The greater the shifts and the more numerous the disruptions, the more companies build buffers into their inventory systems. This is either done formally by adding safety stock or less formally by simply over-ordering, overproducing, or in some cases, hoarding parts. These tendencies can drain a company’s cash reserves.
These actions (or reactions) aren’t done maliciously. Quite the opposite, they are efforts by individuals to protect the organization’s ability to deliver products to customers. While they may help in the short term, over the longer term, they can damage the integrity of the company’s information systems and reinforce a culture of firefighting.
Response Time
The efficiency of your operations determines the speed at which you’re able to react to changing conditions. External pressures demand highly-capable management teams that have the tools and skills to react to unplanned situations. They require robust and flexible scheduling systems. They also create an environment where managers must continuously find ways to improve productivity through streamlining, simplifying and automating processes wherever possible.
As you climb the corporate organization chart, planning time horizons shift from what is happening right now, to what will happen over time. Executives generally focus on capital, product, market, and organizational issues. Moving further down the organization chart toward the point of execution, managers are more focused on shorter-term operating issues, like scheduling, production, and shipping product. Front-line managers deal with what is happening now.
Because front-line managers deal with this focal point of execution, they play a critical role in enabling the company to adjust and respond to changes brought about by strategic shifts or external forces. To avoid building and relying on a culture of firefighting, which is not sustainable over time, companies need to build an environment for their managers that provides them with the right tools and training to dynamically manage their operations.
Dynamic Management
Dynamic management refers to how an individual manages three interrelated things: the process, the performance of the function, and their people. Each of these things influences and reinforces the others, and they need to be considered collectively when changes, whether planned or unplanned, happen.
Many managers live in a reactive environment for the reasons previously mentioned. Dynamic management is the practice of a more deliberate and proactive way for managers and employees to interact and collaborate. It involves assigning work, following up on progress, providing coaching, and correcting mistakes.
Managers are empowered to practice principles of dynamic management when their role is clearly defined, their performance management systems deliver necessary support and visibility, and they are provided with training, coaching, and mentoring. Armed with these tools, managers are free to manage their environment effectively, positioning their organization to respond to shifts in demand and unexpected challenges.
A Problem-Solving Culture
Responding to sudden shifts in strategy requires the same set of operating practices as increasing performance levels – more planning, more interaction, and more problem-solving. If you modify production plans, product mix, or the composition of your supply chain due, it must be followed by carefully coordinated execution that applies dynamic management principles to succeed. The more an organization’s strategies change, the more nimble and agile the operations must be.
A change to an organization’s supply strategy often requires alterations in operations. The flexibility to adapt resources and skills to new demands on the organization can be extremely challenging.
Organizations accustomed to uncovering the root cause of variances possess a greater understanding of their entire operating system, making them better equipped to adjust to changes—even unplanned ones—quickly and smoothly. If the external factors that create the need for a strategic shift also impact the organization’s competitors, the capability to respond quickly can provide a significant competitive advantage.
Regardless of the cause of the change required, it is crucial to stabilize operations as quickly as possible. The shifts in operational strategies to adapt to external challenges are often most visible to the public. But what sets exceptional companies apart from their competitors is the operational excellence to make these shifts invisible to the customer.
