Manufacturing capacity may be tighter than it appears – but opportunities exist when companies look beyond their own four walls. In this Supply Chain Byte, Lisa Anderson discusses recent manufacturing research showing a significant difference in capacity utilization between smaller and larger manufacturers. While many smaller manufacturers still have available capacity, larger manufacturers are operating much closer to their limits.
That creates an opportunity on both sides. Larger manufacturers can expand capacity through strategic partnerships with smaller manufacturers, while smaller manufacturers can position themselves to support larger companies by strengthening capabilities and obtaining the certifications required to serve new customers and industries.
According to a recent survey by Thomas and Xometry, 44% of manufacturers that are less than $50 million are operating below 70% capacity whereas for those greater than $100 million, it is only 16%. Thus, capacity is misaligned in the supply chain. This holds true across clients. It is frequently true that one client will be short capacity while another is over capacity for the same types of products. Even within a client, it is true that one work center will be overloaded when the work center next to it is free. The issue is that they might require different equipment, utilize different skills or do not collaborate jointly.
This dictates the importance of scale and building ecosystems. If you are a larger manufacturer that is short on capacity, the best companies are searching for partners that can fill capacity gaps to offload volume while building internal capacities and capabilities. Some of our clients start off by offloading and decide to develop capacity in strategic areas and continue to build partnerships to support other areas of the business. If you are a smaller manufacturer with excess capacity, build your capabilities to support a diverse set of requirements, and you’ll gain business. Focus on building upon your abilities to handle complexities, compliance, certifications, and changing requirements. Promote these capabilities, and customers will appear. In essence, be an attractive partner.
Partners that can support volume quickly and successfully will thrive. Be thinking about utilizing scale and building your capacities and capabilities to set your company up for success.
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