New report details how CPG companies are responding to customer, market demand
San Mateo, CA — May 11, 2005 — Aberdeen Group has released a new report, "Process Manufacturing Excellence: Strategies for the Plant Floor and Beyond," based on a survey of more than 60 process manufacturers.
The research firm said the report illustrates the importance of scheduling technology, team-planning and performance management for industry leaders. Aberdeen focused on the major business drivers, strategies and technology solutions of best-in-class process manufacturers in the chemical, food and beverage, and pharmaceutical industries.
According to Aberdeen, the key business challenges facing process manufacturers today include responding to major retailer mandates for just-in-time (JIT) delivery that requires improved forecasting; the need to take advantage of opportunistic selling that requires ramping-up quickly; and finally, downward pricing pressure from offshore competitors.
"Across the board, process-oriented manufacturers are undergoing dramatic change. The days of long production runs with few equipment changeovers are being replaced with dynamic schedules, new configuration processes for just-in-time shipment, and substantially more end items," said Jane Biddle, vice president of manufacturing research for Aberdeen. "We've identified a set of capabilities that separate the best-in-class performers from their poorer performing counterparts."
Today's market forces have led to a set of prioritized mandates, including decreased production costs, proactive management of the manufacturing process, the meeting of delivery dates and standardizing best practices. Aberdeen found that manufacturing excellence today is determined primarily by enterprises' ability to rapidly and profitably respond to customer and market demand through improvement programs, greater responsiveness, synchronization and flexibility.
To date, best-in-class companies report that as a result of performance improvement initiatives, 75 percent have reduced inventory levels and 76 percent have increased on-time shipments.
Looking specifically at manufacturers' technology implementations, Aberdeen found that many organizations fill the scheduling gap between enterprise resource planning (ERP) and production with spreadsheet solutions and manual processes. In contrast, best-in-class manufacturers have established common information platforms that enable interoperability throughout manufacturing, support for the detection and response to anomalies, and the foundation for visualization and scenario planning.
Finite scheduling is at the top of many manufacturers' lists for technology acquisition. Seventy-three percent of best-in-class respondents stated that they have already implemented a finite scheduling tool, and 43 percent of all companies plan to implement one in the next 18 months.
Aberdeen also found that best-in-class companies strive to create "a collaborative work environment" for team-planning that enables them to solve problems "from the plant floor to the executive suite." Finally, the research firm saw that "metrics-driven performance improvement programs are paying dividends to leading chemical, food and beverage, pharmaceutical, and other process-oriented manufacturers."
Two companies were interviewed for the report, representing best-in-class manufacturers. One, a major cereal co-packer, was asked by its customer to ship just-in-time in response to daily forecasts extrapolated from point-of-sale data. After implementing an on-demand supply chain planning solution, the company was able to meet the new demand profitably, generating realistic schedules while decreasing inventory levels.