Manufacturing is an industry for all industries. It supports everyone producing products on the market and is a backbone of the economy. However, it is not at all an industry without risk. Particularly for new manufacturers, you can be faced with such challenges that profit looks impossible.
However, in this post, we’re going to break those challenges down bit by bit. We’ll show you how to create a more effective, efficient, and engaged business. One built for success.
Lack of Foresight
Every business works under constraints that is going to impact just how much it can do. One of those most iron-clad constraints is that of the costs the business can afford. Yet many manufacturers go forward, ignorant of the biggest constraint of them all. They don’t take the time to thoroughly understand the resources they can expect to rely on.
Inaccurate sales forecasting is essential to better understand that constraint. The only way to properly do sales forecasting is to use the data already on hand. By relying on probability too much, you are leaving yourself open to either spending too much on resources that don’t get used or spending too little and missing out significant opportunities.
Efficiency is the name of the game in manufacturing. But it doesn’t just matter on the floor, it also matters in your finances. Without a full understanding and accounting of your overheads, it’s all too easy to watch your finances drain as you fail to identify where you might be able to cut costs. Factory overhead and administration overhead, the services, the employees, the supply costs – these all have to be accounted for.
As with your sales forecasting, accuracy is key on the other side of the coin. If you haven’t done a full audit of your overheads yet, now is the time. You can’t bear the risk of not fully understanding where your costs are coming from.
The Skills Gap
Another one of the issues facing the industry of the whole is the aging of the current skilled workforce. The manufacturing business not only needs individuals with knowledge and experience in the field but a growing diversity of hard skills with the equipment involved. One of the best answers regarding the skills gap that is starting to grow is taking the approach of a more thorough training process within the workplace.
Rather than looking solely at recruitment, which has plenty of added cost as well as a shallower pool to choose from, make skills training the core of how your business handles human resources. Systemizing training, keeping knowledge internal in the business, and making use of cross-training also ensures that there’s an even spread of labor and skills throughout the workplace. That way, you won’t be relying on just one or two people to ensure a process can get done.
The Image of Manufacturing
It’s not only that manufacturers are having trouble replacing their skilled workers, either. They’re also facing a image crisis that makes it harder to bring new blood into the industry. Nowadays, manufacturing jobs are seen by many as involving too much menial labor with little room for progression. That’s why you should make paths of progression and the range of experience and skills learned the core of how you advertise positions.
You need to think about not only selling the goods your manufacture and the services you provide, but you need to approach potential recruits as customers. Make sure you focus on the value that the business has to offer its members.
Naturally, how you advertise the business to potential recruits is only as good as how you manage them when they get in the business. Any problem can run into the issue of pigeon-holing people into roles out of necessity, only to find that those roles make it hard for the employee to stay engaged in their work.
Don’t just think of your workforce as labor, but think of the mental capital they’re able to offer as well. The people who work with certain pieces of equipment are going to know them better than their managers. Those who are in charge of logistics and inventory management are going to have a unique idea of the challenges you will face in that department.
Get employees more engaged by having them think beyond their immediate tasks, but rather the changes that could make their jobs easier and the business stronger. Incentivize creativity and offer rewards to anyone who comes up with a strategy that, once implemented, improves efficiency, decreases downtime, or sees a bigger return on investment.
Related to the foresight we mentioned earlier, the inventory of the business is going to play a big role in how cost-effective it can be. Bulk buying in inventory might seem like a good idea for long-term profitability. But when bulk buying, you need to consider that inventory isn’t static, it isn’t a factor that doesn’t shift with time. You need to think about what costs you have to take in order to keep the inventory in good condition.
Besides using space that could otherwise better used, how do you have to condition the space to prevent degradation of your inventory? Understand not only the demand for the supplies you use but the ongoing costs of them. A closer relationship with your suppliers can help you better understand the needs of your inventory so you don’t hold too much.
Another issue you will find with your inventory and your resources is that of manufacturing loss. Goods that can’t make it to market can eat up a significant portion of your profit if you’re not careful. For that reason, you need to tackle it in a few ways. For one, think about the goods themselves.
In many processes, there are chances that accumulating dirt and debris can get in the way of further production. To keep products as clean as possible, you should look at Laser Light Technologies information on clean room processing. The equipment used in the manufacturing process might be as significant a factor in loss as well. Proactive maintenance and constant standardization of equipment are crucial.
One of the greater risks of failing to pay close enough attention to the equipment you use is suffering machine-related downtime. One way to ensure you stay on top of your maintenance is by training those who use or oversee the equipment to maintain it as they go.
Use the planned downtime to improve your machinery. Pay closer attention to the data, as well. Identify each source of downtime as it happens and see how much of a percentage it factors in overall unplanned downtime. It can help you identify problematic parts of the manufacturing setup where you might be due an upgrade or a replacement.
Access to Hardware
Implementing new machinery in the production line can be difficult, particularly from a financial standpoint. You should properly assess every piece of equipment before you buy it. Not just in terms of how much it will cost, but how much need you have of it.
For pieces of equipment that are used more seldom, you might consider outsourcing to contract manufacturing firms. You skip the costs of training, implementation, and maintenance to access the same equipment.
Drops in Quality
It’s not just loss that you need to be concerned with as well. You should also think about the quality of the individual product, too. Too often do low-quality products reach the market only to result in recalls and a bloated customer support demand.
Instead of letting those problems get to store shelves, run a more thorough quality control team on and off the floor. This means having the operators constantly monitoring the processes they’re operating, as well as having the engineers monitoring the product design. Find the most likely quality issues with the design and see if they manifest in the products themselves. The sooner you can identify those quality drops, the quicker you can ensure you’re creating products that increase customer loyalty, not damage it.
Manufacturing is not an environment without risks, anyone who has worked in it can tell you that much. Workers’ compensation can easily make you unprofitable if you aren’t operating a multi-pronged approach to health and safety. It must begin with frequent training and information campaigns, including briefings and signage to keep the dangers of operation always in mind.
But you should be constantly reviewing the workplace as well through regular risk assessments, which includes not only the machinery but the availability and reliability of personal protective equipment. Some businesses will even incentivize clear records free of health and safety violations, including monetary bonuses at the end of the year for those who keep a clean sheet.
These aren’t the only challenges you will face in the manufacturing industry, but they are some of the most common. The key is to keep the business adaptable, to rely on collecting and using data to accurately find the problems and solutions and to make sure that you’re always looking at most cost-effective and efficient ways to get the labor you need.