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How to build a more resilient manufacturing business

Sep 05, 2022

The COVID-19 pandemic created unprecedented problems for manufacturers, from failing supply chains and chronic labor shortages to soaring prices and whipsaw demand swings.

It’s no wonder many executives are asking themselves: Will there ever be a new normal?

Fortunately, there are proven ways to manage through uncertainty. The Wipfli Resilient Manufacturers Study, which surveyed 194 U.S. manufacturers on their abilities to manage challenging business conditions, examined four capabilities required for organizational resiliency:

  • Innovation: Forward-thinking, highly intelligent, information-driven organizations have developed business models that respond rapidly to change with innovative products, services and processes.
  • Growth: They’ve developed strategies, goals and systems centered around growth. They’ve incorporated digital solutions to increase customer loyalty and retention, optimize profitability and revenue, ensure smart decisions based on accurate and timely business intelligence, and produce qualified leads that drive more business.
  • Automation: They have leveraged automation to achieve greater efficiency and productivity, transition people into strategic roles and improve the customer experience.
  • Resilience: Lastly, they have the ability to manufacture a constant quality product at reasonable costs and adhere to production times despite volatile market-demand changes, disturbances and uncertainties with supply chains, workforce fluctuations and cybersecurity threats.

In reality, few manufacturers excel in all four areas. In fact, the Wipfli Study found that while 71% of manufacturing executives consider their companies to be leaders in at least one performance area, only 7% are leaders in all of them.

The good news? The Wipfli study also found that the formula to become a leader in any of these areas is a combination of three key ingredients:

1. Strategy/goals

Without dedicated strategies and goals set on achieving excellence in one specific area — and without aligning those objectives with other corporate strategies — the changes you make to transform your culture and processes can’t be effective. Yet a majority of manufacturers don’t put strategy first:

  • Only 39% have dedicated innovation strategies and goals
  • Only 42% have dedicated growth strategies and goals
  • Only 36% have dedicated automation strategies and goals
  • Only 31% have dedicated resilience strategies and goals

2. Best practices

To achieve operational excellence, your strategies and goals need to be supported by best practices. And while each organization is unique, the Wipfli study found many common best practices are missing:

  • Only 55% of manufacturers frequently observe customers with their products and/or services. Seeing how customers interact with products not only surfaces ideas for future products but can also identify safety or quality issues requiring immediate attention.
  • Only 56% of manufacturers have developed succession plans and identified candidates for a majority of their senior leadership positions. Even successful companies can stagger if faced with a leadership vacuum.
  • A minority of manufacturers have extensively applied automation (42%) or Industry 4.0 technologies (41%) to assist them with quality control and production workflows. Using automation and Industry 4.0 can address many of the challenges currently facing your business, including labor shortages and management of remote workers.
  • A minority of manufacturers monitor their suppliers quarterly or more frequently for quality (42%) and timeliness (37%). As supply chains continue to face delays and shortages, real-time information on suppliers can help you address issues before they impact your production.

3. Solutions

Best practices will deliver performance improvements, but your organization isn’t the same as the next manufacturer. Part of becoming more resilient is identifying your business’s specific challenges and prioritizing finding the right solutions. Do you struggle with innovation? Cybersecurity? Labor? The following common business challenges can give you a starting point to jump off from:

  • A third of manufacturers require a year or more to get new products or services to customers.
  • 37% of manufacturers report frontline annual labor turnover of more than 10%.
  • Only 34% of manufacturers report that their company’s current network infrastructure is fully capable for machine-to-machine communications.
  • Nearly half of manufacturers identified three or more instances of unauthorized access to corporate networks and data in the past year.

Wipfli helps build resilient businesses

Want to become a more resilient manufacturer? Wipfli can help. We bring together people, tools and methodologies to help you:

  • Deploy standard work practices and processes as a foundation for operations — alerting managers and the workforce of variabilities and potential problems
  • Assess your risk profile and establish requirements for continuous operation within those parameters
  • Develop recovery strategies and documented procedures to enable swift responses to disruptions
  • Prescribe accountability mechanisms to keep resiliency plans current

Let us help you make your business more resilient.

Explore our Resilient Manufacturers Study to learn how manufacturing leaders manage innovation, growth, automation and resilience. The study reports on a range of trends and concerns — from how long it takes manufacturers to get new products and services to customers, to annual turnover rates for managers and frontline employees, to the number of data breaches manufacturers experience each year. Download your copy today.

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Author(s)

Bill Boucher, CPA
Manufacturing, Retail & Distribution Practice Leader, Southeast Regional Leader, Partner
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