By Nathan Simon
Bloomberg News recently reported that GE intends to use 3D printers to produce 85,000 fuel nozzles for its newest jet engine, a significant leap for a technology that until now has largely been confined to prototyping tasks.
So significant, in fact, that meeting the company's production targets is contingent on developing new printers that can deliver three to four times the capacity of existing ones. But existing operations can't be just retrofitted for new technologies like 3D printing.
GE is setting up "microfactories" that combine research and manufacturing to facilitate learning about how best to leverage these technologies and the broader implications for business models, operations, and governance.
Although 3D printing is still in its early stages and its applications limited, other information and process technologies such as analytics, the "Internet of Things," advanced materials, and robotics are fundamentally changing how companies manufacture. At the same time, other forces are redefining the parameters of manufacturing.
Growth opportunities are gravitating towards unfamiliar emerging markets and value added services. New competitors, particularly from those same emerging markets, are employing entirely new cost models cultivated in the unique conditions of local markets.
Amid all of this change, manufacturing companies have been hunkered down, having suffered disproportionately during the financial crisis and with production volumes across advanced economies still lagging or, in the case of the U.S., only recently having regained pre-crisis levels. That context caused many companies to tighten their belts. Just as robbers go to banks "because that's where the money is," so, too, cost cutters look to manufacturing operations. That's where the costs are.
As companies try to come to terms with the implications of this new environment, they are running up against the limitations of what their manufacturing operations can do. That is driving a back-to-basics reassessment of production footprint, scope, and technology, and linkages with operational excellence.
But for many companies that process is fraught. They either take a narrow, tactical approach focused on performance parameters divorced from the changes afoot in the external environment or they "boil the ocean" with scenario models that don't lead anywhere. Somewhat more mundanely (but no less significantly), lots of companies either can't get a handle on the alignment of the manufacturing operations, because they lack visibility into costs and performance across their manufacturing network, or won't, due to political sensitivities and vested interests.
On top of that, manufacturing operations consist of expensive, long-lived assets surrounded by complex supporting infrastructure: the sorts of things companies don't like to change too often.
Those limitations are causing companies to turn to consultants for assistance with network optimization, make-or-buy decisions, and production technology strategy. But consulting firms face a delicate balance. They need to be savvy technicians: able to optimize complex production networks across multiple dimensions and for dynamic conditions. More than that, though, consultants need to be perspicacious and sensitive.
Success in manufacturing strategy consulting can be as much about how consultants reach an answer as the answer itself: their ability to overcome political sensitivities, uncover and make sense of hidden and problematic data, and cross organizational boundaries to build consensus.
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