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For industry veterans, periods of high levels of uncertainty are nothing new. Many of today’s leaders were early in their careers when the combination of the dot-com crash and attacks of September 11 caused a relatively short recession with long-term effects on the labor market. Since then, manufacturing has weathered both the Great Recession and COVID-19 recession.

When considering such challenging times, it’s easy to become focused on the increased risks that manufacturers face. It’s important to recognize the flip side of that coin as well. Any period of turmoil also presents opportunity, and companies that react strategically often emerge with an improved competitive position.

On April 1, two days before the Trump administration announced broad new tariff measures that far exceeded the overwhelming majority of what was expected, Michael Huggett was named President and CEO of INDEX Corporation. Because INDEX machines are produced in Germany, one might expect Huggett’s initial time on the job to be focused on dealing with uncertainty and creating flexible plans capable of addressing a range of scenarios. While internal impacts have definitely been a consideration, helping customers navigate the current environment has been an even larger priority.

“Internally, we deal with a fairly long supply chain,” says Huggett. “We are usually forecasting demand and planning our imports a year in advance, so we have some built-in flexibility to deal with immediate uncertainty. Many of our customers are facing much more pressing challenges, and we’re putting a lot of our resources into helping them get through them.”

Developing a proper strategy for the current climate requires looking both at traditional best practices for periods of uncertainty, as well as the unique characteristics of the current period. At present, there is much more to be said about the former than the latter.

“When it comes to the unique elements of where we’re at, I think we can count on two things,” says Huggett. “First, some amount of manufacturing will be reshored over the next several years. The scope and scale will depend on a variety of factors, but there is definitely work currently performed abroad that will be coming back to the U.S. Second, things are going to remain unpredictable for the foreseeable future. Companies that go into a holding pattern until things get more predictable are likely going to be stuck there for a while.”

To maximize their level of success in the current environment, Huggett suggest companies focus less on the conditions of the moment and more on strategies that have proven successful time and time again. His conversations with manufacturers focus on six such related and complementary strategies.

Increase efficiency

While higher levels of efficiency always provide benefits, the impact of such improvements becomes much more pronounced in times of uncertainty. This is also an area where most companies can immediately make some progress. Manufacturers generally have little say in the cost of their inputs, but they have much more control over how efficiently those inputs are put to use.

“This is an area where culture can really pay off,” says Huggett. “Your team needs to be incentivized to identify waste and empowered to eliminate it.”

Providing team members with a feeling of ownership is vital. That can come through a literal stake in the company’s success via profit sharing, or simply by demonstrating that they can make a difference and publicly recognizing their contributions. Some manufacturers even incorporate savings sharing, where employees are financially rewarded for recommending successful cost-reduction efficiency improvements. Regardless of the specific method, establishing a culture of efficiency yields both immediate and long-term benefits.

Minimize work-in-process

By its nature, most work-in-process reflects suboptimal efficiency. In a demanding market environment, it also represents significant risk. From the moment you take delivery of raw material to the point you ship a finished part, you’re carrying its cost. By narrowing that window, you reduce the level of capital needed to conduct business and eliminate significant risk from your operations.

“We are seeing an enormous push to get rid of work-in-process,” says Huggett. “Machine technology has advanced to where we can produce finished parts from bar stock in one machine, even when the complexity is something that would’ve required multiple set ups five or ten years ago.”

In recent years, INDEX has invested significantly in enabling single-machine production via its entire product portfolio, but especially in CNC multispindles for small parts of all levels of complexity, and CNC turn mills for complex medium-to-large parts. Additionally, the company has built up its applications development capabilities to create the processes needed for this approach.

Optimize processes

For many shops, individual part orders grow organically over time. Customers place small orders for prototypes and newly launched products. At this point, shops frequently target minimization of the total time to develop an application and produce the necessary quantity of parts. When dealing with small orders, this balance makes sense.

As order quantities expand, though, maximum efficiency requires revisiting processes and investing the time needed to optimize them. Too often, shops simply maintain the same production method, machining 10,000 or 20,000 parts with processes that were designed for orders of 100 or 500.

When faced with unpredictability, process improvement can provide a quick and relatively easy means to hedge against volatility. Choosing which jobs to evaluate can be as simple as identifying all parts above a defined order quantity and then starting with the oldest ones and working forward.

For the same reason shops should seek to minimize work-in-process, customers facing uncertain demand will likely increase order frequency while decreasing order size. Manufacturers that establish the agility needed to run high-mix, low-volume production will come to be relied on in this environment.

The previously mentioned ability to fully machine parts in one setup obviously helps a shop move in this direction. Additionally, streamlining changeovers provides a boost to flexibility.

“Ideally, you want to group production so that parts requiring the same tools and processes are run on the same machines,” says Huggett. “When you can perform software-only changeovers, you’re able to be much more responsive to shifting customer demands.”

It is also worth tracking what new technologies companies have developed to shorten changeovers. For example, uses a combination of hardware and software for center aligning drills on CNC multi-spindles. While this process can take in excess of 30 minutes when performed manually, CenterMaster achieves it in under 5 minutes.

Prioritize investments

While it is always important to be willing to invest when it would provide benefit, that’s not what is being addressed here. Rather, it is vital that companies facing uncertainty evaluate their options and prioritize those investments that will achieve the best results compared to their alternatives.

For example, if a manufacturer is operating at full capacity and needs to increase output by 25%, there are multiple paths forward. They can choose to expand their facility and increase their amount of equipment by 25%. Or they can replace existing machines with ones capable of producing 25% more product in the same amount of space. The latter almost always proves to be the better move for long-term success.

“When you’re able to replace three or four machines with one, the increase to your production capacity per square foot often delays or eliminates the need for more floorspace,” says Huggett. “Currently, we’re seeing some customers take advantage of that principle as a means for creating additional space to bring previously outsourced processes in-house.”

Embrace partnership

Even when faced with significant challenges, many manufacturers overlook one of the most powerful resources at their disposal. Many machine tool builders and other providers of advanced manufacturing technology have grown to offer far more than physical products.

“Over the past five years, there has been a dramatic increase in what manufacturers want from their machine tool builder,” says Huggett. “Offering a world-class machine is often only enough to get us into the conversation. When we sell a machine, it’s usually a result of our investment in applications development and ability to provide turnkey solutions, including training.”

 

Partnering for success

Whether you’re struggling with how to deal with uncertainty or already have a plan and merely need support in implementing it, INDEX has invested in the technology and expertise needed to be a partner in your success. INDEX’s latest whitepaper to learn more about how the company is helping customers manage growth.