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© Gajus Dreamstime Electronics Production | November 10, 2016

The creation of a sustainable manufacturing strategy

To find a place to exist as a product owning company today, you should in addition to a product- and business strategy also ensure a sustainable manufacturing strategy.
Factors such as customer demands, social, environmental and long-term profitability and competitiveness needs to be penetrated based on own circumstances regarding for instance products, customers, sales markets and volumes.

To continuously work to increase the efficiency and utilization of the resources available can sometimes be difficult as product owners with its own production. Customer volume fluctuations means that you often have either too much staff and available machine capacity in decline, or the opposite in an upturn. Producing only your own products, it may be difficult or impossible to balance the production in the short term, depending on demand. This is an important factor in sustainable manufacturing strategy when you want to ensure high utilization of available resources.

Working to reduce the environmental impact of its product manufacturing can also be difficult since companies in many cases have built up complex and geographically diverse supplier network. This creates logistic solutions that has very negative impact on the environment. To instead build manufacturing clusters with most manufacturing technologies within a smaller geographic dispersion creates the conditions for just that.

A strong request from these product owners is to have control over their overall environmental impact beginning with the choice made of components, raw materials and processes already in the design of their products – something called Eco-Design. Creating this platform presumes transparency between the product owner, contract manufacturer and component manufacturer, but also for the contract manufacturer to make the leap into the world of IT-solutions and digitization. Many are behind in this development which creates difficulties for the product owner to succeed in its strategy to create more environmentally friendly products for the future.

The cost of a product is largely determined already in the design stage. But it is also important to create a financially sustainable model where efficiency and improved resource utilization can also be reflected in the cost of the products. Important factors here are in addition to the actual cost price also stock turnover, lead time, tied-up capital and quality outcomes – something that is often overlooked when in many cases chasing the lowest price.

As a product owner, you want to be in the forefront of the above key objectives, but not by compromising your competitiveness and profitability. Therefore, it is important that the contract manufacturing business partner can create a production platform for its customers to ensure high resource utilization, optimize logistics, possibility of ECO design, combined with competitive pricing.

Only then can you begin to build for the future. Only then can you start to talk about sustainable manufacturing strategy.

Written by: Thomas Lindström - Senior Vice President Head of Business Solutions at Hanza

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