Articles Archives - Seraph https://seraph.com/insights/category/insights/articles/ Solutions That Drive Sustainable Change Wed, 08 May 2024 15:02:42 +0000 en-US hourly 1 https://seraph.com/wp-content/uploads/2022/09/cropped-512x512-1-32x32.jpg Articles Archives - Seraph https://seraph.com/insights/category/insights/articles/ 32 32 Cost Management Tops the List of Automotive Industry Challenges https://seraph.com/insights/cost-management-tops-the-list-of-automotive-industry-challenges/ Fri, 12 Apr 2024 15:02:35 +0000 https://seraph.com/?p=9342 A look at how Cost Management Tops the List of Automotive Industry Challenges and 5 ways to overcome this challenge

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We share our perspective on 5 effective solutions.

Periodically, Seraph surveys key members of the automotive industry to determine the ‘real’ challenges that the industry faces on a regular basis.  In our most recent survey, cost management rose prominently to the top as the primary concern for Suppliers and 2nd only behind the EV transition for OEMs.  

Given inflation pressures in labor, material, and energy, it’s no surprise that companies are facing a stronger squeeze between price and cost.  Continuing to address that margin gap has been a challenge for decades but is increasingly difficult.  With Seraph’s work in the automotive sector and the clients we serve, we have a unique perspective on what the common and effective solutions are.

 

Source: Seraph Automotive Trends report

Although the rate at which average vehicle pricing increases has slowed down, it has increased approximately 20% over the past 5 yearsAlong with those price increases, inventory of salable vehicles has increased 48% in the past year suggesting that pricing pressures limit the ability to expect car buyers to continue to absorb the full burden of inflation pressures.

 

Source: Seraph Automotive Trends report

The automotive industry isn’t alone in the requirement to reduce costs in the face of inflation pressures and cost reduction and management are normal courses of business for OEMs and Suppliers alikeIn Seraph’s experience, we’ve experienced a few proven practices to combat the squeeze between cost and price.  

1. Back to basics 

It’s always most important to rally around processes, standardization, and lean practices in crisis situations, but interestingly we find that as the situation gets more difficult, companies and teams have a habit of abandoning practices that are known to work.  Working through a value-steam map exercise to improve process efficiency, maintaining good process discipline, problem-solving disciplines, and rallying around good leadership and employee empowerment processes are very strong solutions to preventing cost variances and ensuring cost avoidance in difficult times.  Difficult times can not equate to excuses to abandon basic practices that allow for improvement. 

2. Operational efficiency improvement 

Most facilities have a never-ending pursuit of improved efficiency. Seraph is asked by clients to complete assessments of their facilities using our assessment tools and we are continually surprised at the level of inefficiency in them.  Our data tells us that facilities, on average, are less efficient than they were prior to the pandemic.  In many cases, facility OEE is far below expectations and there are limited actions to improve it.  In most cases, team members in facilities know how to improve the OEE but lose momentum to doing so as they focus on the cost reduction activities of the day prioritized by leadership.  But operational efficiency will typically result in a much greater cost save for labor, material, and energy, than micromanagement of a travel budget or an overtime approval process.  Certainly, those actions should be considered part of watching a company’s costs, but it can’t stop there, and priority must be put on improvement the operations for a much better return. 

3. Relocation and consolidation of footprint 

As markets have changed and the squeeze has made it more and more difficult to maintain margins, it’s ever more important to review manufacturing footprints for duplicate or underutilized capacity and labor market costs.  In Europe, most companies have discussed, and some are putting actions in place to move capacity to Northern Africa to reduce their labor costs. LCC labor typically has been in Eastern European countries but as they experience labor inflation rates significantly higher than countries in Western Europe, Northern Africa has become more and more attractive.  While Eastern Europe remains labor cost advantaged, Northern Africa seems to provide a longer-term opportunity for investment. 

4. Increased use of automation 

Investment in automation has been increasing in the industry for some time.  We see many countries leading the way in the investment in automation and that investment is providing for strong returns in Europe.  Improving costs through labor elimination or redeploying labor to other productive areas is a sound strategy for managing costs as it reduces the marginal cost of each additional unit produced. 

5. De-risking the China-Europe supply chain 

China has been a region for decades that companies have sourced for lower costs, so it seems counterintuitive to discuss re-shoring from China as a potential cost management strategy.  However, tariffs, geopolitical events, and the like have shown us recently that while China can provide cost improvement in the short term, there are longer term effects that must be considered in the risk analysis of sourcing in there. 

 

About Seraph 

A global enterprise consulting firm that partners with business leaders to handle their most complex problems in areas such as supply chain, operations, and manufacturing challenges while delivering long-term operational and leadership improvements. Seraph has extensive on-site industry experience in the automotive, private equity, defense, medical device, electronics, energy infrastructure, and engineering sectors. The Seraph leadership team brings vast expertise across; crisis management, mergers, acquisitions, due diligence, restructuring, turn-around services, product launches, and logistics. Our four-phase process has been proven to provide quick payback and positive ROI, which is measured throughout customer engagement. Learn more at www.seraph.com and follow Seraph on LinkedIn.

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Hear from our team this Women’s Day! https://seraph.com/insights/hear-from-our-team-this-womens-day/ https://seraph.com/insights/hear-from-our-team-this-womens-day/#comments Fri, 08 Mar 2024 19:14:40 +0000 https://seraph.com/?p=8740 The post Hear from our team this Women’s Day! appeared first on Seraph.

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Seraph takes immense pride in the daily achievements and collaborative efforts of our team and clients. This success is made possible by a group of exceptionally talented professionals and inspiring personalities who make up our team.

In celebration of International Women’s Day, we shine a spotlight on some of the remarkable women within our team, sharing insights from some of them. We’ve asked about their experiences in the automotive/manufacturing industry and their broader career journeys. See their answers below:

 

Leslie Bednarz

VP of Business Development

How important has having other women to get inspired by been for you?

 It’s been so important having automotive women leaders to not only look up to but also work with throughout my career.  Women who understand, empathize with, encourage & support other women is so meaningful and powerful in the automotive industry. Great women leaders help cultivate a culture of ‘belonging’ for us all.

Amy Kroll

HR Director

What is your favorite part of working in manufacturing? 

My favorite part of manufacturing is being part of a leadership team that is motivated and driven to make a positive impact to a struggling plant.  It is exciting how quickly positive changes can occur, when you have the right team in place.  It not only impacts the leadership team but everyone within the facility.  

Tracy Guschewski

Executive Assistant

What challenges do women face in this industry, and what advice can you give them?

As a woman in a traditionally male-dominated industry, it is important to find your own voice and understand the leader you are aspiring to be.  There will be days that ‘holding people accountable’ will be described as pushy; or ‘asking the necessary questions’ will be perceived as intimidating; but in the end, as a woman at the table, say what you’re thinking out loud and with intention.   Be brave, be bold, be heard!

Meghan Ligon

Sales Coordinator / Analyst

What advice would you give to other women interested in pursuing a career in automotive/manufacturing?

The automotive and manufacturing industries have traditionally been male-dominated, but don’t let that discourage you. Focus on your abilities and the value you bring to the table, regardless of gender stereotypes. It is important to look for mentors and role models, both male and female, who can provide valuable guidance and support as you progress in your career.

Jennifer Sullivan

Senior Consultant

What is your favorite part of working in manufacturing?

There is never a dull moment and always a new challenge. Identifying an opportunity to improve, developing a strategy to achieve that goal, and seeing it through to fruition gives a tremendous sense of accomplishment.  Of course, as anyone in manufacturing knows, those opportunities never stop coming.  Even the best can always be better.

What advice would you give to other women interested in pursuing a career in automotive/manufacturing?

Automotive and manufacturing careers bring fulfillment to those who enjoy a challenge. Problem solvers and doers will love the pace and opportunity to do what they do best, find resolutions, and look for the next opportunity to improve. Like many careers, manufacturing requires continuous learning and openness to new ideas.  Stagnation not only slows career development but defeats the whole purpose of pursuing a career in manufacturing.  Getting entry-level roles may not be as challenging as moving beyond them.  Seek out those like-minded colleagues and managers and learn from them.  Look for opportunities to expand your knowledge (and work on your EI) by joining problem-solving teams and new projects.  If getting on those teams proves difficult, reach out to those leaders and managers to find out what you need to do/learn to be the next chosen.  Always look for opportunities to improve both the workplace and yourself.

Alexandra Lipsky

Analyst

How important has having other women to get inspired by been for you?

Breaking into the traditionally male-dominated automotive and manufacturing scene can be quite daunting for young women. However, witnessing women in leadership roles is not only inspiring but also encouraging. These trailblazing women often go above and beyond to earn respect, fostering a hardworking atmosphere and introducing fresh perspectives and strategies. Personally, I feel privileged to learn from strong, independent, and dedicated women daily at Seraph and within our client base. I am so excited to learn and grow from, and one day join this new wave of women leaders shaping the fast-paced world of automotive and manufacturing. Happy International Women’s Day!

 

Leticia Santos

Communication Coordinator

What unique elements do women bring to the automotive/manufacturing sector?

Women bring diverse perspectives to any sector, enhancing collaboration, attention to detail, and a people-centric focus. I believe that our overall communication skills can differ from others, and are crucial to fostering a more inclusive, creative, and innovative industry. The women I’ve worked with were great leaders with the talent to consistently delve deeper into situations, finding opportunities within details for improvement and fostering creative problem-solving.

Lisa DiFalco

Brand Strategist

How important has having other women to get inspired by been for you?

There have been a handful of women that I’ve had the privilege to work with throughout my career that I’ve learned a great deal from. They demonstrated what it took to be of value to our clients. They pushed me to be better in the areas I was deficient. These women made me a more well-rounded employee.

 

Briana Cavanaugh

Office Manager/HR Assistant

It’s been rewarding to witness the growth and development of the Seraph team. I’ve seen the addition of many strong and inspiring women, who bring new and unique perspectives to our company and the industries we’re involved with. I am grateful to be a part this team that recognizes and empowers everyone’s individual strengths and contributions. Through mentoring, training, and collaborating we are instilled the confidence to conquer new spaces, regardless of gender identity. This is especially wonderful as these spaces have historically been so male dominated. I am excited to see how these industries will continue to grow in diversity over time, and it feels good to know I’m part of something that is directly contributing to these changes. 

Our pride in celebrating the women at Seraph extends beyond this special day, acknowledging the ongoing contributions of our team, clients, and all the women who support our business in various capacities.

 

Happy International Women’s Day!

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Disruptions Remain a Cog in the Automotive Supply Chain Wheel https://seraph.com/insights/disruptions-remain-a-cog-in-the-automotive-supply-chain-wheel/ https://seraph.com/insights/disruptions-remain-a-cog-in-the-automotive-supply-chain-wheel/#respond Mon, 22 Jan 2024 16:44:01 +0000 https://seraph.com/?p=7122 The post Disruptions Remain a Cog in the Automotive Supply Chain Wheel appeared first on Seraph.

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In recent developments, the crisis in the Red Sea has had tangible consequences for the automotive supply chain, leading Tesla and Volvo to announce temporary production suspensions in Europe due to a component shortage originating from plants in Asia. Brian Fairchild, our Senior Director of Sales and Sales Operations, highlighted the ongoing challenges in the automotive supply chain, emphasizing that disruptions are becoming more manageable post-COVID. However, he cautioned about potential future disruptions, particularly in the realm of labor, as the United Auto Workers expand their influence beyond traditional associations.

Fairchild underscored concerns about potential wage increases impacting suppliers and a shift in focus by the UAW towards other manufacturing sectors. Border issues, particularly between the U.S. and Mexico, are also identified as a potential challenge, impacting customs checks and slowing the flow of components. The evolving dynamics with China and nearshoring, as well as the influence of political environments and ethical sourcing considerations, add further layers of complexity to the automotive supply chain. The overarching geopolitical concerns and the financial implications of significant investments in electric vehicle (EV) initiatives were also acknowledged, especially with the potential softening of demand and infrastructure challenges.

In the face of these challenges, Fairchild commended the resilience and adaptability of the supply chain but emphasized the ongoing need for careful management to navigate potential disruptions without compromising efficiency or accumulating excess inventory.

For further insights into Brian’s comments, you can refer to the Supply Chain Management Review piece following the link below.

 

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Team Building: Analysts Team Runs Spartan Race https://seraph.com/insights/team-building-analysts-team-runs-spartan-race/ https://seraph.com/insights/team-building-analysts-team-runs-spartan-race/#comments Mon, 23 Oct 2023 19:49:19 +0000 https://seraph.com/?p=6993 The post Team Building: Analysts Team Runs Spartan Race appeared first on Seraph.

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Our boots-on-the-ground mindset goes beyond our work…
Our team of analysts ran the Spartan race yesterday in Grand Rapids, MI!

Our team-building activity wasn’t your typical race; it was a hilarious mix of speed, teamwork, and laughter. We may not have broken any records, but we certainly reached new heights together! 

#Seraph #teamwork #Spartan #operationalexcellence

 

 

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Majid Arefi joins Seraph’s Europe Business Development Team https://seraph.com/insights/majid-arefi-join-seraphs-europe-business-development-team/ https://seraph.com/insights/majid-arefi-join-seraphs-europe-business-development-team/#respond Wed, 02 Aug 2023 17:45:33 +0000 https://seraph.com/?p=6714 The post Majid Arefi joins Seraph’s Europe Business Development Team appeared first on Seraph.

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Seraph is delighted to announce the appointment of Majid Arefi as the new Director of Business Development for Europe. Based in Germany, Majid will be instrumental in creating new business opportunities and driving Seraph’s continued growth and global expansion.

With over 30 years of experience in the automotive industry worldwide, Majid Arefi brings a wealth of expertise to his new role. His diverse background includes various key positions in Operations, Quality, Manufacturing, Business Development, Project Management, Product Development, and Innovation. Throughout his career, Majid has achieved remarkable success in expanding businesses’ market share and profitability while extending their global reach. Notably, he has been at the forefront of leading innovative projects and implementing quality initiatives across manufacturing facilities, with a dedicated focus on Key Performance Indicators (KPIs).

Before joining Seraph, Majid held leadership roles at Ford, Lear, and Faurecia. His extensive and diverse experience spans regions such as North America, Europe, and China, covering different tiers of the automotive industry. Majid’s collaboration with clients from around the world, including France, Spain, and the Czech Republic, further enhances his ability to expand Seraph’s business globally.

Majid’s academic background aligns seamlessly with his professional accomplishments, as he holds both a Bachelor of Science and a Master’s degree in mechanical engineering from Wayne State University.

With Majid Arefi leading the charge in Business Development for Europe, Seraph is confident in its ability to explore new opportunities and solidify its position as a global player in the automotive industry. His wealth of experience and expertise will undoubtedly contribute to Seraph’s ongoing success and growth on a worldwide scale.

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5 Factors Contributing to the Skilled Labor Shortage  https://seraph.com/insights/5-factors-contributing-to-the-skilled-labor-shortage/ https://seraph.com/insights/5-factors-contributing-to-the-skilled-labor-shortage/#comments Wed, 26 Jul 2023 14:13:13 +0000 https://seraph.com/?p=6674 Dive deep into the factors causing the skilled labor shortage in the U.S. manufacturing industry, such as changes in education, technology and demographics.

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As we stand in the middle of 2023, the American manufacturing industry finds itself in an unprecedented labor predicament, facing a skilled labor shortage that risks derailing the sector’s growth trajectory. The Bureau of Labor Statistics reports a staggering 700,000 job openings in manufacturing, the highest figure since records began. This critical talent shortage begs an answer to the question: Why are so many positions left vacant in an industry once considered the bedrock of America’s economy? This workforce crisis is multifaceted and stems from an aging workforce, insufficient vocational training programs, technological advancements, and a frustrating stigma against blue-collar work. The repercussions for employers are severe, facing increased costs, production delays, and a stifled capacity for innovation. As for the overall economy, these dynamics threaten not only economic recovery post-COVID-19 but also America’s global competitiveness in manufacturing, driving the urgency to resolve this growing labor conundrum. While the roots of this looming crisis are deep and wide-reaching, understanding it is the first step to achieving a resolution. 

1. The Changing Landscape of Education 

In recent decades, the educational landscape in the United States has undergone a profound transformation. There’s been an increasingly dominant narrative that a four-year college degree is the one-size-fits-all solution to success. As a result, traditional vocational and technical education was left on the back burner and widely regarded as an inferior decision. This shift in priorities has had unintended consequences for the manufacturing industry. Despite the fact that many of these skilled trades offer high wages and rewarding career paths, they’ve been undervalued and overlooked as second-tier options.  

To counteract this trend, numerous initiatives have been launched to reinvigorate interest in the manufacturing trades. These initiatives represent a promising start, demonstrating that with robust support and sufficient resources, it’s possible to generate a renewed interest in manufacturing careers and help secure the industry’s future. 

2. The Role of Technological Advancement 

In addition to shifts in educational priorities, the rapid pace of technological advancement also contributes to the skilled labor shortage. Each year, the industry further transitions from traditional manual labor towards technologically advanced roles maintaining automated systems. Unfortunately, the skillset of the current workforce is struggling to keep up. Many workers trained in traditional manufacturing techniques find themselves grappling with complex machinery and digital systems, with limited access to the necessary retraining programs. The learning curve is steep, and the risk of workers being left behind is a very real one. Instead of robust training and recruitment programs, manufacturers tend to compete for a shrinking pool of talent. This technological skills gap underscores the critical need for lifelong learning and ongoing training in the manufacturing industry

In response to these difficulties, ‘reskilling’ and ‘upskilling’ programs are also being implemented by some forward-thinking manufacturers, viewing employee development as a necessary investment rather than an expense to be cut. If the industry can successfully harness these educational tools and strategies, it may be possible to overcome the technological skills gap and prepare the workforce for the future of manufacturing. 

3. Demographic Shifts and the Aging Workforce 

The demographic changes sweeping across the United States won’t leave the manufacturing industry unscathed. As is the case with many other industries and even nations, a rapidly aging workforce with a substantial proportion of its skilled laborers nearing retirement age. As this wave of retirements hits, the industry faces the monumental task of filling these vacancies to prevent a sharp decline in production capacity. 

Yet attracting younger workers to replace retiring professionals has been a significant challenge for the industry. Despite offering competitive salaries and benefits, manufacturing struggles to shake off its outdated image as dirty, dangerous, and monotonous work. While demographics shifts and educational tendencies (the first factor) are different, the downstream result is much the same and the responses are highly similar. Many manufacturers and institutions within manufacturing are making a concerted effort to make manufacturing a viable or even “sexy” vocation. 

Several strategies have shown promise. It’s important to make the jobs meaningful and desirable and create recruitment pathways. Established businesses can learn much from the narratives crafted by VC-backed startups like SpaceX and Hadrian. These companies have effectively mastered the art of recruiting top talent by articulating grand visions that resonate on a moral level, departing from jargon-filled corporate speak. 

SpaceX captivates by promising the exploration and colonization of Mars. The aerospace supplier, Hadrian, aims to revitalize American manufacturing through automation while elevating the status of the machinists who work there. Such visions and framing make it much easier to attract talent at all levels and win over industries that demand less from their employees. 

This approach is complemented by initiatives to quickly onboard established talent pools, such as the Manufacturing Institute’s Heroes MAKE America program. This program taps into the under-utilized talent pool of military veterans, aiming to bridge the skills gap by training them for rewarding careers in manufacturing. Although few groups match the military in size and training level, forging relationships with high schools, colleges, and young adult sports clubs can establish a robust talent pipeline. 

4. Perception of the Manufacturing Industry 

Perception often carries as much weight as reality when it comes to career choices, and unfortunately for the manufacturing industry, prevailing perceptions have been unflattering. In a world where technology companies and start-ups are often seen as the most desirable employers, manufacturing can seem less appealing to a generation raised on a diet of Silicon Valley success stories. To counter this perception problem, it’s crucial for the industry to launch a concerted effort to rebrand and highlight the reality of modern manufacturing. 

Employers can play a significant role in this regard by actively promoting the exciting aspects of manufacturing jobs. Sharing success stories, highlighting the innovative technologies used in their facilities, and emphasizing the problem-solving nature of manufacturing work can help alter perceptions. Partnerships with local schools and community organizations can expose students to the possibilities of manufacturing careers at an early age. Changing entrenched perceptions won’t happen overnight, but with a consistent, proactive approach, the manufacturing industry can start attracting a new generation of skilled workers ready to push the boundaries of innovation. 

5. Economic Factors Influencing the Labor Shortage 

Broad economic factors have had no small hand in the current skilled labor shortage. Chief among these is the issue of wage competition. As sectors such as technology, finance, and healthcare experience substantial growth, they have been able to attract talent with competitive salaries. Globalization, too, has reshaped the landscape of the U.S. manufacturing industry. With the opening of global markets, production operations have often been relocated to countries with lower labor costs. This offshoring trend has led to job insecurity in the domestic manufacturing industry, discouraging many from pursuing careers in this field due to fears of job displacement. 

The COVID-19 pandemic has further complicated the situation. The crisis exposed vulnerabilities in global supply chains and led to a temporary halt of manufacturing operations in several sectors. This caused layoffs and furloughs, shaking workers’ confidence in the stability of manufacturing jobs. Even as industries have begun to recover, the echoes of the pandemic continue to influence worker availability and job security perceptions. However, the pandemic has also underscored the importance of a robust domestic manufacturing sector as the need for locally produced goods became acutely apparent. 

Conclusion 

Different factors have coalesced to create a complex environment for manufacturers in North America. The industry has its work cut out for it, however decades of robust American manufacturing has taught us to never write the sector off. While many companies need talent for the long term, other companies only need short term interventions to help overcome production crises or to help provide stability during a shaky period. To help solve these problems, our team of specialized operational consultants works alongside manufacturers and acts as a support structure to optimize logistics and operations. Our advisors are former management at many suppliers and OEMs and are experts in production, operational efficiency, and crisis management. Contact us today to schedule a discovery call, or see our case studies for more information.

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Developing Contingency Plans for Footprint Consolidation https://seraph.com/insights/developing-contingency-plans-for-footprint-consolidation/ https://seraph.com/insights/developing-contingency-plans-for-footprint-consolidation/#respond Tue, 06 Jun 2023 11:59:30 +0000 https://seraph.com/?p=6318 Contingency plans for footprint consolidation are a necessary part of risk management for manufacturing companies. Learn more with Seraph.

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When plants are under capacitized, footprint consolidation is a necessary strategic process for organizations to remain competitive in an ever-changing and increasingly competitive market. This strategy focuses on optimizing an organization’s facilities, resources, and production processes to reduce costs and enhance efficiency. Within manufacturing, developing contingency plans for footprint consolidation is crucial to ensuring long-term success and resilience by responding to changing market conditions. 

Learning from 2008  

The 2008 financial crisis was a global economic catastrophe triggered by a combination of factors, including unsustainable mortgage lending, the collapse of the housing market, and widespread financial deregulation. The crisis led to a severe economic downturn, resulting in massive job losses and financial hardship for individuals and businesses alike.

As a business highly reliant on available financing for customers, the automotive industry faced the brutal consequences of the crisis. The resulting declining consumer demand for automobiles, coupled with financial challenges faced by major manufacturers, led to a restructuring of the industry. Many automotive companies were forced to seek government assistance or declare bankruptcy. The crisis highlighted the need for businesses to be proactive in identifying potential risks and developing effective contingency plans to mitigate them. 

Benefits of Footprint Consolidation in Automotive Manufacturing 

The demand for vehicles has been very strong over recent years, but an economic downturn is inevitable. No one really knows when it will happen, or how fast it will come when it does. But those who plan for it will be the ones able to act quickly when the challenge arises.    

There are several benefits to proactive planning for footprint consolidation. Although “no plan survives contact with the enemy,” a good plan will provide a framework for rapid cost reduction and improved efficiency, better utilizing the available resources. 

A leaner and more efficient manufacturing operation allows automotive manufacturers to efficiently adapt to changing market conditions and customer preferences. With optimized resource usage, companies can better focus on innovation, product quality, and meeting customer needs. This ultimately strengthens their competitive position in the industry. 

Developing Contingency Plans for Footprint Consolidation 

In order to stay ahead of the curve and respond proactively instead of reactively to threats, manufacturers must have a suite of contingency plans. Manufacturers must begin by analyzing current risks, their current manufacturing footprint, and establishing goals and plans for consolidation. 

The first step to developing a contingency plan for footprint consolidation is to identify the potential risks and challenges the future may present. These may be things like economic downturns, technological disruptions, natural disasters, and supply chain disruptions. This step is crucial to understanding the potential triggers for footprint consolidation and, by understanding the trigger, a contingency plan can be made. 

The next step is to analyze existing facilities and operations, including the locations of manufacturing plants, assembly lines, and distribution centers. This assessment should identify potential redundancies, inefficiencies, and areas for improvement. It should also factor in which products are most likely to remain in demand in a downside scenario. With an understanding of the current manufacturing footprint and potential risks, manufacturers can set specific goals and objectives for footprint consolidation. These should be aligned with the overall corporate strategy and focused on improving efficiency, reducing costs, and enhancing the company’s competitive advantage. 

Any contingency plan should outline the steps necessary to achieve the consolidation goals. This includes identifying sites for consolidation, evaluating resources and capacity requirements, and establishing a timeline for implementation.  

Scenario Analysis 

One of the best ways to develop contingency plans for footprint consolidation is through scenario analysis. The correct contingency plan for an economic downturn will likely not look like the same contingency plan for a collapse of lower-tier suppliers. This requires a case-by-case scenario analysis and rank-ordering of the most likely and most detrimental scenarios. Some threats may require manufacturing expansion, while others may require near-shoring or reshoring. 

Implementing the Consolidation Plan 

Any consolidation plan must be developed with criteria in mind for what will trigger the implementation of the contingency plan. Otherwise, companies risk overreacting to minor market movements, which could be worse than not having a contingency plan at all. Before the plan is ever implemented, it must be communicated to the stakeholders and approved by the company’s leadership team. Open communication with stakeholders, including employees, suppliers, and customers, is essential to gain buy-in and support for the consolidation process. Transparent communication helps alleviate concerns and ensures everyone understands the reasoning behind the plan and the expected benefits. 

Employees must also have a basic understanding of the consolidation plan. Footprint consolidation can be a challenging process that often involves workforce adjustments, such as relocations, layoffs, or reskilling. Providing resources and support to employees can help them understand the role they will play in any consolidation and what their options are in the event that a consolidation becomes necessary. Providing resources and support to affected employees is crucial for maintaining morale and ensuring a smooth transition. Transparent communication, employee training, and engagement programs can help build trust and foster cooperation during the process. 

After implementing the consolidation plan, the leadership must track progress against the plan’s objectives and milestones to determine if any modifications are necessary. By monitoring progress, automotive manufacturers can identify potential issues, make data-driven decisions, and adjust the plan as needed to maintain momentum and stay on track. 

Conclusion 

Contingency plans for footprint consolidation are a necessary part of any manufacturing company’s future, especially after the 2008 financial crisis and the pandemic. While it’s good practice for companies to engage in footprint consolidation planning, it’s also worthwhile to engage in constant kaizen cycles to improve operational efficiency. There is a balance to be struck between optimizing for efficiency and leaving enough meat on the bones during times of scarcity. To help create an environment of optimized operational efficiency, our team of specialized operational consultants are trained to act as a support structure and optimize logistics operations from day one. Our advisors are former management at many suppliers and OEMs and are experts in production, operational efficiency, and crisis management. Contact us today to schedule a discovery call, or see our case studies for more information.

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The Skill Gap: Why It’s a Problem and What Manufacturers Can Do About It https://seraph.com/insights/the-skill-gap-why-its-a-problem-and-what-manufacturers-can-do-about-it/ https://seraph.com/insights/the-skill-gap-why-its-a-problem-and-what-manufacturers-can-do-about-it/#respond Tue, 30 May 2023 13:45:57 +0000 https://seraph.com/?p=6299 In 2021 87% of companies said that they currently had a skills gap or were facing an imminent skills gap; the current talent they possess is simply insufficient to fill the demands of the company. Since then, in the aftermath of the COVID pandemic, companies have indeed found themselves in the position of needing to fill vacancies that applicants just aren’t qualified to fill. As companies grapple with the widening gap between “skills possessed” and “skills needed,” it is the leadership’s responsibility to confront this multifaceted problem. This can be done in a number of ways, including creating apprenticeship opportunities, better education, and simply making manufacturing more attractive.  What Is the Skill Gap?  The “skills gap” is a term that was coined in the 1970s after a period of high inflation and high unemployment. The term refers to the increasingly large vacuum that exists between the skills that manufacturers need to continue producing products and the skills that workers possess. Despite growing demand for skilled labor from manufacturers, interest in manufacturing careers among those entering the workforce continues to decline.  The widening of the skills gap can be attributed to several different markets and demographic factors like rapid technological advancements, […]

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In 2021 87% of companies said that they currently had a skills gap or were facing an imminent skills gap; the current talent they possess is simply insufficient to fill the demands of the company. Since then, in the aftermath of the COVID pandemic, companies have indeed found themselves in the position of needing to fill vacancies that applicants just aren’t qualified to fill. As companies grapple with the widening gap between “skills possessed” and “skills needed,” it is the leadership’s responsibility to confront this multifaceted problem. This can be done in a number of ways, including creating apprenticeship opportunities, better education, and simply making manufacturing more attractive. 

What Is the Skill Gap? 

The “skills gap” is a term that was coined in the 1970s after a period of high inflation and high unemployment. The term refers to the increasingly large vacuum that exists between the skills that manufacturers need to continue producing products and the skills that workers possess. Despite growing demand for skilled labor from manufacturers, interest in manufacturing careers among those entering the workforce continues to decline. 

The widening of the skills gap can be attributed to several different markets and demographic factors like rapid technological advancements, aging workforces, and disinterest in manufacturing careers among youth. The inability of manufacturers to attract and retain highly skilled workers may eventually be an existential threat to the entire industry as we know it. The effects of this are wide-reaching, affecting both individuals and the entire economy. 

The Impact of the Skills Gap on Manufacturing 

The consequences of failing to bridge the skills gap are concerning and may affect the long-term well-being of the manufacturing sector. First, the exodus of aging professionals after 2020 reduced the human knowledge base of manufacturing techniques. When older workers retired, they took with them the knowledge and wisdom they had won during decades of working in manufacturing. This has led to declining productivity levels. To make matters worse, there’s a notable lack of young workers who are willing and able to refill the positions left by the retiring workforce. Not only aren’t there enough skilled hands, there just aren’t enough hands period.  

A widening skills gap will result in less innovation, loss of competition, and loss of operational efficiency. There will be fewer qualified people to handle advanced robotics, artificial intelligence, and other such technologies which will impede innovation. Other countries that aren’t suffering the same crisis will, as a result, begin to drive innovation and North America will likely lose market share to foreign actors. Operational efficiency will also suffer simply because there aren’t enough workers to manage the throughput and output of different products. 

How Manufacturers Can Address the Skills Gap 

While the skills gap does indeed merit “all-hands” attention, it is still certainly a solvable problem with the right initiatives and enough gumption. Manufacturers can (and must) take proactive steps to guarantee a bright future for the industry. There are three main things that can be done: Workforce development programs, collaboration with educational institutions, and partnering with the public sector to incentivize development. 

Workforce programs can take several different forms like apprenticeships and internships. These workforce development programs allow manufacturers to tailor their workforce development programs to suit the exact skills they’re missing. These initiatives benefit both the worker and the company; the worker benefits by having employment immediately after finishing the apprenticeship and he or she doesn’t have to pay to learn extraneous skills just to  “graduate.” The manufacturers benefit by having access to a pool of talent that has been trained specifically to solve a problem that they have. Beyond entry-level workforce development programs, ongoing on-the-job training and skill upgrades for existing employees will help employees and manufacturers alike stay ahead of the curve and remain competitive. 

Manufacturers can also look to formal education institutions such as technical and vocational schools to help attract, train, and facilitate a steady flow of talent into the manufacturer’s ranks. When partnering with educational institutions, manufacturers must be able to take an active role in helping to develop the curricula for manufacturing careers. Not only does this help fill the pipeline of potential candidates for manufacturing positions, but it can also help manufacturers craft the narrative about vocations in the manufacturing sector. 

Leveraging government and private sector support through tax initiatives and creating private-public partnerships can be another excellent way to incentivize training and development. This can provide a robust framework to enable the manufacturing sector to bridge the skills gap and reclaim its competitive edge. 

Long-Term Strategies for Bridging the Skills Gap 

When looking towards the future, manufacturers must invest in long-term strategies to prevent the skills gap from widening even more and impeding future growth. Most importantly, embracing technology and automation can complement human labor, ultimately improving productivity and reducing the burden of skill-intensive tasks. Manufacturers must also advocate for a culture of lifelong learning and continuous skill development, enabling employees to adapt and excel as the landscape of the industry evolves. This culture of growth and self-improvement helps organizations become more resilient in the face of rapid technological advancements.  

In addition to looking toward the future, manufacturers must also look inwards and foster a culture of innovation and adaptation. By encouraging employees to think creatively and embrace change, manufacturers can maintain a competitive edge in an increasingly global market. In effect, these long-term strategies provide a blueprint for a thriving manufacturing industry that will overcome the challenges presented by the skills gap. 

Conclusion 

The skills gap is a real phenomenon with emerging real-world consequences. However, companies can and must take concrete steps to avoid falling victim to a lack of skilled labor and to create a bright future for the manufacturing sector. Some companies need short-term talent supplementation to remedy acute production crises. To help solve these problems, our team of specialized operational consultants works alongside manufacturers and acts as a support structure to optimize logistics and operations. Our advisors are former management at many suppliers and OEMs and are experts in production, operational efficiency, and crisis management. Contact us today to schedule a discovery call, or see our case studies for more information. 

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Effective Inventory Management Strategies for Medical Device Manufacturers https://seraph.com/insights/effective-inventory-management-strategies-for-medical-device-manufacturers/ https://seraph.com/insights/effective-inventory-management-strategies-for-medical-device-manufacturers/#respond Mon, 15 May 2023 15:57:48 +0000 https://seraph.com/?p=6267 Annual revenue for medical device manufacturers is expected to surpass $800 billion by the end of the decade. However medical device manufacturers must give careful consideration to supply chain and inventory management which represents the second largest expenditure in medical device manufacturing. With proper inventory strategies, manufacturers can not only affect their own bottom lines, they can also meaningfully contribute to the improvement of patient care within the healthcare industry. This is accomplished by reducing inventory costs which reduce the overall cost of healthcare and by decreasing the amount of lead time to treatment.  Challenges to Inventory Management  There are several different factors that can affect inventory optimization for medical device manufacturers. First, the lack of visibility throughout the supply chain is problematic. Manufacturers tend to undervalue supply chain technology and inventory management systems. These are either not seen as a competitive advantage among manufacturers or are underutilized to the point that the information becomes inaccurate. With inaccurate and underutilized information, predicting demand and managing inventory becomes a nearly impossible task. This ripples up the supply chain causing production uncertainty and down the supply chain requiring hospitals to maintain large levels of inventory instead of relying on JIT delivery. Ultimately, […]

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Annual revenue for medical device manufacturers is expected to surpass $800 billion by the end of the decade. However medical device manufacturers must give careful consideration to supply chain and inventory management which represents the second largest expenditure in medical device manufacturing. With proper inventory strategies, manufacturers can not only affect their own bottom lines, they can also meaningfully contribute to the improvement of patient care within the healthcare industry. This is accomplished by reducing inventory costs which reduce the overall cost of healthcare and by decreasing the amount of lead time to treatment. 

Challenges to Inventory Management 

There are several different factors that can affect inventory optimization for medical device manufacturers. First, the lack of visibility throughout the supply chain is problematic. Manufacturers tend to undervalue supply chain technology and inventory management systems. These are either not seen as a competitive advantage among manufacturers or are underutilized to the point that the information becomes inaccurate. With inaccurate and underutilized information, predicting demand and managing inventory becomes a nearly impossible task. This ripples up the supply chain causing production uncertainty and down the supply chain requiring hospitals to maintain large levels of inventory instead of relying on JIT delivery. Ultimately, patients are the ones bearing the higher inventory costs and sometimes a lower quality of care. 

Impacts of Improper Inventory Management 

In addition to patients bearing the brunt of higher inventory costs, mismanaged inventory can lead to other negative consequences. Medical device shortages can lead to lost revenue for hospital systems, longer lead times, and lower patient satisfaction. Healthcare providers are also stuck in the undesirable position of providing inferior care, extending the time to care, and in extreme circumstances, the use of expired products. Even when the appropriate devices are present, healthcare providers are also forced to spend more time tracking down the right materials needed for a given patient. During periods of abundance, a whole new set of problems and inefficiencies arise. Healthcare institutions must increase the amount of time, labor, and funding for inventory management which raises the cost of healthcare. 

Inventory Management Solutions for Medical Device Manufacturers 

Inventory-associated losses are accepted by many manufacturers as part of the cost of doing business. However, many inefficiencies can be mitigated if not eliminated altogether and result in an improved bottom line. Implementing these solutions means gaining buy-in from other stakeholders, adhering to regulations, prioritizing patient care and cultivating a culture of efficiency. 

Digitize and Integrate Systems 

Manufacturers, healthcare providers, and sales representatives all use different systems to track the output, throughput, and usage of medical devices. These disparate sources of “truth” end up creating an unhealthy amount of dissonance when managing inventory. This leads to waste and obsolescence of different medical equipment which could be mitigated by a harmonized and integrated system. Manufacturers must be the first movers to use these systems and equip the sales team with inventory management solutions. These solutions should also be combined with QR codes connected to a central ERP to monitor inventory needs and respond when they become too high or too low. 

Use Advanced Analytics 

Demand for medical devices is nonlinear and extremely unpredictable. The lack of visibility within current inventory levels across the manufacturers, sales reps, and healthcare providers further exacerbates this problem in demand and production planning. However, advancements in artificial intelligence and machine learning, give manufacturers a better base to begin predicting demand for their different products. This ultimately leads to less field inventory, fewer inventory costs, and more narrow JIT windows. 

Increase Stakeholder Visibility 

Solutions that increase stakeholder visibility will also help them understand the types of resources that are currently being allocated to inventory management. Through this transparency and visibility, manufacturers can show in a tangible way the benefit of proper inventory management. This will help gain buy-in from stakeholders, primarily those closest to patient care (and inventory), like hospital administrators and clinicians. 

Optimize Distribution Network 

Patient care is uncompromisingly the priority in all aspects of healthcare, including the medical device industry. Any actions taken, therefore, should not interfere with patient care. Because of this, medical device inventory is often kept in a very decentralized manner. Different components are stored nearly everywhere to ensure low to no lead times and ensure the highest level of patient care. However, medical device inventory is often inefficiently stored in places that don’t meaningfully affect patient care. To solve this issue, a network analysis can identify the demand for a given product and its nearest point of inventory.  

Adopt JIT Inventory 

Finally, adopting a JIT inventory approach helps medical device manufacturers manage their own inventory and consignment inventory more efficiently and effectively. Manufacturers are able to order higher-tier materials with more precision and accurate lead times. This not only reduces inventory costs but also reduces carrying costs while minimizing the risk of obsolescence.  

The approach requires much collaboration from other suppliers as well as forecasting which is why advanced data analytics, increased stakeholder visibility, and integrated systems are so important. Efficient internal processes are also essential for successful JIT production. While JIT sophistication can be a challenge to meet and maintain, it can drastically reduce waste, inventory costs, and increase responsiveness to market demand. 

How Seraph Can Help 

Managing inventory effectively is crucial for the success of any medical device manufacturer. By following best practices companies can optimize their inventory management and improve their bottom line. However, even with the best practices, companies may still encounter inventory management problems. In these situations, hiring a specialized consultant can be a valuable solution. A consulting agency can provide expert analysis and advice on specific inventory management issues, as well as help implement and monitor new inventory management strategies.    Thanks to our team of specialized medical device operational consultants, Seraph can come alongside medical device manufacturers and act as a support structure and begin adding value from day one. Our advisors are former management at many suppliers and OEMs and are experts in production and operational efficiency. Contact us today to schedule a discovery call, or see our case studies for more information. 

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Five Benefits of Planned Preventative Maintenance https://seraph.com/insights/five-benefits-of-planned-preventative-maintenance/ https://seraph.com/insights/five-benefits-of-planned-preventative-maintenance/#respond Tue, 11 Apr 2023 13:55:08 +0000 https://seraph.com/?p=6212 The post Five Benefits of Planned Preventative Maintenance appeared first on Seraph.

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Facing a problem while it is small and manageable is always better than delaying action and facing the problem when it’s much bigger, especially in maintenance. Planned preventative maintenance (PPM) is one of the best ways for companies to take a proactive posture toward problem solving. The benefits of proactively dealing with known future problems are many, but they ultimately translate into better capacity for planning, less downtime, and greater reliability. PPM isn’t industry-specific and A&D, automotive, and medical device manufacturers alike can all avail themselves of the benefits that come with PMM implementation.  

What Is Planned Preventative Maintenance? 

PPM is a strategy that many companies use to schedule maintenance for their machines before the point where they break down. PPM is a maintenance strategy that performs maintenance on a regular basis and reduces the likelihood of unplanned failures and unplanned downtime. It allows companies to plan ahead for inventory, output, replacement parts, and other maintenance overhead. It also gives companies peace of mind to know that their technicians are solving problems before they can ever materialize. There are essentially two different types of maintenance: time-based and usage-based. 

Time-Based 

Time-based PPM is completed at regular intervals with the aid of preventative maintenance software. Even when on maintenance schedules, technicians should be proactively reviewing critical machinery for unexpected “wear and tear” and potential points of failure. Regular equipment checks, even outside of those required by the maintenance schedule, are still good practices to help decrease breakdowns. 

Condition-Based 

Usage-based PPM relies on machine production averages and statistics to determine when maintenance is needed. No single system is better than another and the two are often used in consort in a “whichever comes first” manner. 

The Benefits of Planned Preventative Maintenance 

There are many benefits to PPM and it should be noted that PPM is often an indicator of the quality and reliability of a business. Manufacturers who take their job seriously will almost always have planned preventative maintenance schedules in place. This is a broader indicator of a company that proactively solves problems and doesn’t wait for breakdowns to happen before addressing them. 

Reduce Production Downtime 

First and foremost, PPM reduces the risk of interruption to production lines and throughput by reducing the likelihood of breakdowns. Different assets and pieces of machinery represent different levels of criticality so it would be unfair to say that the downstream effects of different breakdowns are equal in effect. However, the problems with critical machinery may cause the entire production line to come to a total standstill. This has massive implications for downstream manufacturers and may end up costing the company hundreds of thousands if not millions of dollars in fees imposed by tier 1 suppliers or OEMs. PPM gets as close as possible to completely eliminating this risk.  

Extend the Machinery’s Useful Life 

In addition to reducing downtime, PPM also extends the machinery’s useful life. When one component within a machine fails, it can frequently cause a cascade of other failures. For example, a cooling unit could fail which can cause the entire machine to overheat which can cause damage to the machinery beyond just the cooling unit. Additionally, a longer useful life will translate into fewer pieces of machinery needed during the life of the company. PPM can increase useful life beyond amortization schedules and ultimately result in a small absolute number of equipment purchases. 

Organize Workforce Management 

PPM also helps plan the workforce—both technicians as well as machine operators and line workers. Having planned maintenance means avoiding unplanned downtime and inefficient use of human resources. Having a reactive maintenance schedule means waiting for technicians to arrive as well as underutilizing the floor workers’ time who would otherwise be productive. With PPM Overseeing engineers and floor workers will have a clear schedule with minimal interruptions. 

Create a Healthier and Safer Workspace 

Running afoul of OSHA rules and being the subject of unsafe working conditions complaints costs time, money, and employee morale. These issues are also easily avoidable with the correct forethought and attention to detail. PPM, in addition to reducing unplanned downtime, also reduces the likelihood of injury to the manufacturer’s employees by maintaining the equipment in proper working order. Not only are safe working environments the ethical way of doing business, but this also helps reduce the risks of lawsuits and paying disability.  

Plan Costs Efficiently 

Reactive maintenance creates an unknown cost in several different ways. First, manufacturers will not know how much it will cost to purchase replacement parts or how much time it will take the technicians to perform the maintenance. Second, every minute of downtime, especially on a critical piece of machinery, means lost dollars in opportunity cost. Planning and scheduling PPM turns the unknown into a concrete number by planning exactly which parts will need replacement, how much labor it will take, and approximately how long the machine will be out of service. With this information, the manufacturer can plan additional replacement inventory, production inventory, and throughput to make up for the repair time. What would otherwise be an extremely variable cost can now be expected and planned for. 

Preventative Maintenance Software 

Preventative maintenance software is a crucial component of performing PPM. Many manufacturers have hundreds of different machines that need maintenance and spreadsheets are simply insufficient to track all of the inputs, outputs, and maintenance schedules. Using preventative maintenance software helps the engineering team understand which machines need maintenance, which parts need to be replaced, and how long it will take. In other words, preventative maintenance software is the glue that holds PPM efforts together and keeps the management, employees, and engineering team on the same page. 

Steps for Preventative Maintenance

Even if a company don’t have software to manage preventative maintenance and timing, there are some low-tech steps to reduce equipment downtime in the plant.  

As a plant builds out a framework for preventative maintenance, it makes sense to start with the highest priority equipment. It’s best to start by tracking equipment with the longest cycle times, no back-up equipment available, long lead times for parts as well as those with high complexity and cost of repairs.  

To implement proactive preventative maintenance, follow the “PERFORM” approach: 

  1. Plan: Develop a PPM schedule that outlines maintenance tasks, machinery or equipment involved, and due dates. Assign responsibilities for maintenance tasks to specific employees. 
  2. Examine: Encourage employees to continuously monitor equipment for signs of wear and tear or other issues, and to report problems immediately. This creates a culture of proactive maintenance and problem-solving. 
  3. Review: Conduct regular audits of the maintenance process to identify areas for improvement and reduce waste. This involves analyzing the maintenance schedule, identifying ways to optimize the use of resources, and finding ways to prevent problems from recurring. 
  4. Foster: Encourage cross-functional collaboration and knowledge-sharing to improve the effectiveness of the maintenance process. When operators, supervisors, engineers and maintenance teams talk, problems get solved faster and true root-causes are identified. 
  5. Optimize: Collect and analyze data on equipment failure rates, maintenance task completion rates, and other relevant metrics. Use this data to identify trends, patterns, and areas for improvement. 
  6. Refine: Standardize the maintenance process, including the schedule of tasks, the tools and techniques used, and the documentation of maintenance activities. 
  7. Motivate: Encourage employees to suggest improvements to the maintenance process and to implement small changes to improve efficiency and effectiveness. Celebrate wins! 

Conclusion 

PPM is just one part of a larger area of operational efficiency called logistics. Logistics manages the flow of material, labor, and energy into, through, and out of a factory. Ensuring that critical machinery experiences minimal disruption only serves to maximize the operational and logistical efficiency of a given manufacturing facility. Companies that find they have consistent issues with breakdowns and inefficient logistics may find it useful to hire an operations consulting firm like Seraph. Our team of specialized operational consultants works alongside manufacturers and acts as a support structure to optimize logistics and operations. Our advisors are former management at many suppliers and OEMs and are experts in production, operational efficiency, and crisis management. Contact us today to schedule a discovery call, or see our case studies for more information.

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