Manufacturing at an efficient level requires economies of scale.
Many of our clients looking to progress in their success often look to acquire companies to vertically integrate their production or partner with other companies to help with production.
However, we often have to advise them to take a step back before diving into the deep end. Although the idea of acquisition and partnership are attractive, looking into how ready your factory is in integration with another should be a top priority. One thing we help the clients understand is to look at the Manufacturing Readiness Level (MRLs) to make an informed decision before committing to acquisition or partnerships.
What are MRLs?
MRLs are quantitative measures used to assess the maturity of a given technology, component, or system from a manufacturing perspective. They are used to provide decision-makers at all levels with a shared understanding of the relative maturity and attendant risks associated with manufacturing technologies, products, and processes being considered.
Manufacturing risk identification and management are essential at the early stages of technology development. Manufacturers must invest consistently through each stage of the program’s lifecycle.
Although relatively straightforward, MRLs are often overlooked, even though it’s essentially a background check before collaboration or integration. Often blinded by ambition, even big companies are susceptible to overlooking MRLs searching for economies of scale.
MRL was developed by the United States Department of Defense (DoD) and is now used by other branches of the American government and the EU.
DoD is the largest purchaser of complex manufactured products, so we will use the DoD to understand how vital it is to understand MRL. In the development of the F-35 Joint Strike Fighter, the DoD failed to use MRLs and resulted in one of the most expensive projects by the organization (totaling $400M, double of their estimate).
Apple is another example of a high-profile multinational company that failed to acknowledge MRLs before promising a product and executing a deal with a (now bankrupt) sapphire glass manufacturer, GT Advanced. Failure in recognizing the partnership’s feasibility and compatibility with the production schedule has driven GT Advanced bankrupt and Apple at a great financial loss.
MRLs Risk Elements to consider
We’ve summarized the nine risk elements in MRL down below. Referring to the table below, the goal is to get all 9 of these risk factors towards the upper band of the MRL. The higher each factor is, the more prepared your factory is for expansion.
While there is more complexity in each level (you can read through DoD’s official document here if you have a lot of time and taste for dry government manuals) we’ve highlighted the risks to get you slightly accustomed to MRL.
- Technology & the Industrial Base. Does the technology exist, and is there a manufacturing base to produce it? Less developed countries, for example, may have access to general technology but not the industrial base to manufacture a product.
- Design. How is the product designed? Innovative products may exist, but they cannot be manufactured economically because the design is not optimized for production.
- Materials. Do the materials exist in the necessary quantities?
- Cost & Funding. Is there enough funding to bring this product to full production?
- Process Capacity and Control. Process capacity and control applies to all manufacturing. Look in detail at all the capacity and controls throughout manufacturing.
- Quality Management. Weak or non-existent quality management leads to delays and waste.
- Manufacturing Personnel. Does the company or the country have the manufacturing personnel? Many products require a highly trained and specialized workforce.
- Facilities. Many products need specialized production facilities.
Although the task may be daunting, all manufacturers should try to move up the scale for each risk to be fully prepared when expanding the operations. We have four suggestions that we believe will help you move up through the MRL.
- Take your time. Planning and due diligence are always worth it. Investigate the underlying conditions and understand where the MRL for a given company or product. Consolidate on the decision and validate the data before moving up the MRL.
- Start small. Start with experiments and testing to ensure that claims can be backed up and the manufacturing is feasible. This is a version of the “crawl, walk, run” method. If you look, each level becomes more prominent and more complicated. Start at the lowest level and work up rather than trying to jump ahead.
- Do not commit without extensive validation, or the manufacturer might go out of business. The Apple case from earlier is a perfect example of this mistake.
- Use statistical tools. Need for Design of Experiments (DoE) and Statistical Process Control(SPC) before significant commitments. These tools can provide valuable insights into the current level and the feasibility of moving up MRL levels. To learn more about these statistical tools, check out our blogs.
MRL is an essential tool for all manufacturers looking to expand their operations. It is a tool that helps make informed decisions and could be the key to saving money and time when your company is due for expansion or collaboration.
If you are looking into learning more about MRL and how you can use this tool to assess risk, CMC’s consultants are on-the-ground and are ready to assist. Schedule a call with us today.