The global manufacturing industry faces a challenging environment, with increasing energy prices, tariffs affecting exports, and slowing demand. The default solution—outsourcing production to best-cost countries—is not always possible, particularly in a world of geopolitical and geoeconomic uncertainties, unstable supply chains, and unpredictable tariffs.
Operations leaders are having to consider their cost base and rethink their operational efficiencies to remain competitive. Areas must be found where costs can be optimized—and leaders frequently turn first toward direct operations. However, companies can instead (or also) consider an often-overlooked area of significant cost-savings potential: manufacturing support functions. Also known as indirect operations, these production support functions—engineering, quality management, production management, maintenance, and supply chain management—are vital to efficient, day-to-day factory operations and frequently offer opportunities for value creation.
Admittedly, assessing the potential locked up within manufacturing support functions can be complex. Often an individual company, and even plants within a company, follow their own structuring and evaluation model (including different definitions of titles and functional roles), leading to a lack of standardization. This, in turn, makes it difficult to compare the performance of manufacturing support functions across companies.
In fact, many operations managers may know they have excess capacity in their support functions but do not know how much or where the excess capacity is. Four steps can help leaders better understand the opportunity within manufacturing support functions so they can set fact-based targets and move toward effective action.
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