How manufacturers meet the scalability moment

Their circumstances vary, but each of these manufacturers achieved something crucial: the ability to react to changes in customer demand, changes to their operating conditions, even to a nation’s urgent call.

German agricultural machinery manufacturer Fendt needed to meet rising consumer demand for larger and more powerful tractors. After a devastating earthquake and tsunami, automaker Toyota reimagined its supply chain. And a global pandemic prompted the United Kingdom’s Royal Mint to produce medical visors to protect the lives of frontline healthcare workers.

These enterprises shared a common goal: scalability. Today’s manufacturers must be prepared to scale up – or down – to respond to market disruptions and take advantage of unexpected opportunities.

Scalability involves streamlining production processes, optimizing the use of resources, and increasing capacity to handle varying volumes of work as needed. Today, advances in technology are upending entire product categories, challenging manufacturers to increase or decrease the volume of parts, subsystems, or products they make.

Consider, for example, the explosive growth in demand for electronic vehicles and its effect on the auto industry. According to the 2023 edition of the International Energy Agency’s Global Electric Vehicle Outlook report, more than 10 million electric cars were sold worldwide in 2022. Sales are expected to grow by another 35% in 2023 to 14 million, amounting to 18% of the overall car market. In response, manufacturers like Audi, General Motors, and Ford Motor Company are retrofitting factories and overhauling production processes to assemble electric vehicles.

Achieving greater degrees of scalability in manufacturing processes remains a stiff challenge. It’s like tasking a battleship to learn a new dance step, with workers doing new moves, machinery that can adjust to new inputs, and business processes that coordinate all of the above. It’s a large set of challenges that takes planning and investment.

To tackle them, manufacturers are exploring innovative ways to reach greater degrees of scalability while managing costs. Strategies include investing in workers’ skills, capitalizing on smart manufacturing technologies, rethinking existing business processes, and factoring variability into manufacturing processes. Read on for more information about how manufacturers can improve their scalability.

Invest in a talented workforce

In 2023, manufacturers face a problem of finding enough of the right people to work in their plants. In the United States, 74.4% of respondents to a National Association of Manufacturers survey in the second quarter of 2023 said the top challenge facing manufacturers is attracting and retaining a quality workforce. Why? Working in today’s factories requires technology expertise in everything from knowing how to make a 3D-printed part to configuring sensors for proper data collection to allow sharing of data among people and machines.

In response, manufacturers are investing in training and relationships. German automaker Audi has established a training budget of close to 500 million euros to prepare its staff for making electric vehicles at all of its production sites worldwide by 2025. U.S.-based food manufacturer General Mills is among a number of companies looking to hire retirees to help, the Wall Street Journal reported. So is American defense missile maker Raytheon, reported Defense One.

It will take these types of commitments to build a workforce that can drive manufacturers’ scalability.

Relying on its workforce is a key element in the UK Royal Mint’s shift to producing medical products. In a matter of days, the Mint began mass manufacturing medical visors for the UK National Health Service in response to the COVID-19 pandemic.

“The Royal Mint, which normally makes billions of coins every year, pivoted overnight,” says Daniel Eyers, a lecturer in manufacturing systems management at Cardiff University in Cardiff, Wales. “They began making COVID visors because they could exploit flexibility within their workforce and within their processes. They completely changed the scale of their operation.”

Capitalize on smart manufacturing technologies

Fluctuations in product demand require manufacturers to adjust their production volumes quickly. In smart manufacturing, factory operators analyze data from equipment sensors and automate production systems. Practitioners incorporate data from inventory warehouses and supply chain partners to coordinate the flow of materials.

Smart manufacturing enables scalability by, for example, mitigating the risk of production disruptions. Unanticipated equipment failures prompted by sudden changes can cause significant production delays and product quality problems. Smart factory systems can generate insights that provide manufacturers “with a better understanding of what’s going on throughout their operations,” says Eyers. Smart sensors affixed to critical equipment and facilities provide real-time feedback on everything from the quality of parts being manufactured to potential equipment failures that could inhibit scalability.

All data is not created equal, however. Eyers notes that manufacturers must be mindful that they are viewing the right quality data to glean useful information from sensors and other data-generating devices. “Some of the danger around smart manufacturing is that it gives us too much data and not enough information,” he says. It’s important that “individual manufacturing operations teams know what they’re looking for” before delving into the data, Eyers adds.

Reevaluate existing business processes

Another way manufacturers can overhaul their manufacturing processes for greater scalability is by adopting dynamic production planning. Static product planning assumes that the steps in a production process are set and not subject to change. Dynamic product planning, on the other hand, assumes that these processes will change, from how raw materials are received to the physical space where products are manufactured. Accounting for these unanticipated shifts in the planning stages, before manufacturing begins, can allow for greater supply chain flexibility and ease of production flows.

The impetus for pursuing scalability can vary, too. While some events, like COVID-19, force organizations to scale temporarily, others call for a more permanent shift. Toyota’s wake-up call came in March 2011 in the form of a magnitude 9 earthquake. At the time, Toyota built 45% of its vehicles in Japan. So when a deadly earthquake and tsunami forced the automobile manufacturer to close its Japanese plants for nearly two months, it knew it had to react. A key decision was to create uniform parts, no matter where they were produced.

“When it was hit by earthquakes in Japan, Toyota realized that it needed to standardize its products around the world so that it could have some slack and actually produce parts in other regions in the world,” says Arnd Huchzermeier, a professor at the WHU – Otto Beisheim School of Management in Germany.

To accomplish this feat, Toyota began by standardizing parts across Japanese automakers so that common components could be shared and manufactured in several locations, as Reuters reported at the time. In the case of specialized parts that could not be built in multiple locations, Toyota worked with suppliers further down the supply chain to build redundant inventory that could be easily accessed in the event of another earthquake or natural disaster.

In fact, according to Huchzermeier, “there’s a really big drive toward product and process standardization as manufacturers look to shift inventories around the world. If a pandemic hits in Mexico and you can’t manufacture a product, you can produce it in other regions.”

The Toyota case is important because it highlights the efforts made by a company known for its lean manufacturing practices that seek to reduce waste while increasing productivity. Many manufacturers have relied on lean approaches for their production systems. But while lean manufacturing’s standardized work processes and procedures can contain costs, it can also “limit manufacturers in what they can offer” by preventing them from easily adding or changing product lines, warns Huchzermeier.

Another tool in helping manufacturers adjust is 3D printing, also known as additive manufacturing. The technology can benefit a manufacturer’s scalability by quickly producing parts or components of a product using computer-aided designs.

Because not all manufacturers are using 3D machines to increase internal capacity, it’s another opportunity to tap into supplier networks to scale up or down as parts are needed.

Eyers says many manufacturers are choosing to tap into a global network of partners with additive manufacturing capabilities.

“If I have an additive manufacturing machine and it’s full, or I need extra capacity, I can outsource that to a worldwide network of additive manufacturing machines,” he says. “These machines are general purpose. What I can print in the UK, I can print on a machine in Europe or the U.S. I can outsource demand so scaling up is quite easy.”

Amnovis, for example, is a Belgium-based additive manufacturing production and engineering company that uses additive manufacturing to produce high-end medical devices for its partners. Medical device firm CairnSurgical recently partnered with Amnovis to 3D print a product designed to help surgeons accurately locate and remove cancerous breast tumors during lumpectomies, the 3D Printing Industry publication reported.

Deploy digital twins to plan production and pinpoint areas for improvement.

Consumers today expect some degree of personalization in the products they purchase. But satisfying these demands can place enormous pressure on assembly systems – and increase the need for scalability.

“The challenge,” says Huchzermeier, “is if you have lots of different products that are highly customized, you must perform different tasks on different products all the time, which is highly demanding on workers and can create huge spikes in workloads.”

Huchzermeier says digital twin technology can help manufacturers scale production up or down quickly to gain mass personalization in manufacturing. A digital twin works by serving as a virtual model of a physical product, process, or system. By mimicking the various aspects of the manufacturing process, including design, testing, and performance, in such accurate detail, a digital twin can identify areas where production should be increased or decreased to handle spikes in workloads. A digital twin can also flag areas where production processes can be improved. For example, manufacturers can run experiments on changing the sequence of products that go down the assembly line, making small adjustments that can create a less stressful sequence of tasks for workers.

Factor variability into manufacturing processes

Beyond virtual models and 3D printing machines, Huchzermeier says, “companies can’t have scalable manufacturing unless they pay attention to how they organize work.”

It’s a lesson learned by Fendt at a time when the agricultural machinery manufacturer was facing greater customer demand for tractors of larger size and with more horsepower. Like many manufacturers, Fendt relied on a fixed takt or fixed pulse method to manufacturing in which changes in a product portfolio require rebalancing an assembly line and modifying product sequences – a detailed scheduling process that manufacturers use to order the production of purchase orders based on customer demand.

But these workarounds can be costly and lead to delays in production. In response, Fendt chose to abandon its fixed takt method and instead, introduced its VarioTakt system in its 900,000- square-foot tractor plant in Marktoberdorf, Germany.

In a case study published by the Institute for Operations Research and the Management Sciences, Huchzermeier describes Fendt’s VarioTakt method, in which products are put onto the assembly line at varying rates rather than fixed rates. This not only allows the manufacturer to fulfill individualized customer requests, but also “mostly eliminates such labor inefficiencies as idle time and utility work” and reduces “the complexity of production planning – in particular, assembly line balancing and sequencing.”

By adopting this scalable method to manufacturing, Fendt can assemble all 10 of its product series on a single assembly line. For example, Fendt’s 1000 Vario, one of its largest tractors on the market, is now assembled with its smallest tractor on the same assembly line – despite a 738% difference in horsepower.

Refining existing operations to gain greater scalability takes planning and investment. That’s the plan Audi unveiled in 2022: converting its entire network of global production factories and phasing out production of its combustion models by 2033. The German luxury automaker opted to invest in its existing plants rather than build new “production sites or greenfield plants” to accommodate its production needs. (This is in addition to the commitment to train its workforce.)

To ensure the premium manufacturer will be able to respond more flexibly to fluctuations in customer demand or production program, Audi will make its manufacturing processes even more flexible. “We want to structure both product and production, so we get the optimum benefit for our customers,” says Gerd Walker, Audi’s board member for production and logistics, in a company statement. To this end, the new Audi Q6 e-tron, for example, will initially be made in Ingolstadt on the same line as the Audi A4 and A5. The electric models will then gradually replace the combustion cars on the lines.

Pandemic pivots

Production lines at the UK Royal Mint were not the only ones making fast pivots. Other manufacturers' adjustments during the pandemic were a dramatic illustration in scalability as companies rescheduled their operations and shifted capacity from one plant to another – sometimes with life-saving consequences.

When COVID hit, General Motors tapped into its automobile manufacturing capabilities to produce 30,000 ventilators for the United States. That same year, Lamborghini’s upholstery department began making 1,000 surgical masks a day, and later used 3D printers to produce lung simulators to help test ventilator designs, according to a CBI Insights report. And 3M manufactured more than four billion respirators in two years, the company’s 2021 annual report notes.