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10 Must Do’s For Small and Medium Sized Manufacturers
The world has never seen a more competitive and accessible marketplace. Manufacturing companies must operate as lean as possible to maintain profitability and a healthy bottom line. My nearly three years at Global Shop Solutions has put the magnificence of the manufacturing industry front and center in my life. Everything around us, at some point in time, was touched by a human hand – it is truly amazing to think about. I feel fortunate that my role provides the unique opportunity to spend time with owners, presidents, and key personnel at many of our thousands of customers across the 25+ countries and 20+ industries Global Shop Solutions serves. I spend the majority of this precious time simply listening to what makes their businesses lean, efficient, and successful.
What have I learned?
Whether the company is a large project fabricator such as Arc Designs, an industrial manufacturer such as Miller Welding & Machine Company, a tool manufacturer such as Fullerton Tool Company, or a leading production/job shop like H&R Manufacturing and Supply, I have found 10 common “must do’s” that enable manufacturers to cut costs, operate in a lean and efficient manner, and maintain a commitment to excellence.
Here we go, and thank you for reading.
- Lower Labor Costs. To compete against global competition, especially for North American or European manufacturers, labor costs must be kept to an absolute minimum. This doesn’t mean less people; it means less wasteful minutes. Speed up setup times, measure your employees, and reduce indirect labor and redtime. This is accomplished by leveraging real-time data on the shop floor with touch screen graphical user interfaces (GUIs), bar coded work orders, and mobile devices. Know what your employees are doing as they are doing it.
- Cut Cycle Time. Competing means having a short cycle time and compressing the time between the sequences in your manufacturing. Some companies have been able to cut cycle time by up to 50% by automating processes and leveraging flex schedules with their manufacturing software. And since every company runs their business a little differently, automation requires a software package that can be customized through a software development kit like Global Shop Solutions GAB SDK.
- Automate Scheduling and On-Time Delivery. Manufacturing companies that turn the corner on efficiency mostly say the same thing, “We used to spend too much time on scheduling.” Lean manufacturers do it automatically, as it saves time and frees up your human capital to spend more time calling customers, creating new ideas, and proactively managing the business. And since every manufacturer has different processes, machines, and philosophies, the increased efficiency from automating your scheduling requires customization.
- Automated Purchasing. The most successful manufacturers I speak with rely on automated purchasing so they know when to buy parts and in what quantity. The guessing game disappears, and the manufacturer can spend most of their time improving price and delivery, decreasing inventory, and reducing obsolescence. Automation requires customization. Do I sound like a broken mp3 file yet? (Sorry Bleeker Bob, records are dead to me.)
- Quick and Accurate Quoting. The more jobs you can quote and the more accurate those quotes become, the more jobs you win. It’s that simple. If you are an efficient manufacturer, winning jobs means profit and margin. The successful and efficient manufacturers I speak with take all the guessing out of the quoting process by using an automated system for pricing and quoting anything they are manufacturing. Again, since every business is different the automation of your quoting requires customization of your manufacturing software.
- One Integrated System. Lean manufacturers manage the entire manufacturing process with a single integrated system that handles all aspects of their business from quote to cash. Data is entered into the system or captured by the system one time and one time only. The information then becomes available, or is pushed to anyone in the company at any time, based on system security and permissions. The integrated system approach puts all employees on the same page at the same time with the same information. As one customer put it, “You don’t order cable, Internet, and phone from three different companies when you can find one trusted partner that can do it all – and do it better.”
- Spreadsheet Reduction. It’s a little-known secret that most manufacturers want to be tree huggers. Paper on the shop floor is slow. The more paper and spreadsheets on the shop floor the more hunting, pecking, and lost time. Lean manufacturers reduce paper and spreadsheets. The integrated system notifies employees which job to run next, or the employees view real-time dispatch lists on the shop floor, leveraging a product like TrueView™. No more asking supervisors for directions or hunting down paperwork. All the information regarding the next job is available at the touch of a button, click of a mouse, or glance at a screen. Every manufacturer is different, and the greater the degree of automation and paperless(ness), the more customization you need from your business software.
- Accurate Inventory. Inventory often represents a “black hole” for cash flow. The most efficient manufacturers protect cash flow by knowing their inventory. Moreover, they integrate their inventory with all the other processes so they can manage it in a highly efficient and effective manner. This requires a single integrated system (re: point 6).
- Delight Customers. Repeat orders happen when customers are serviced truthfully, quickly and accurately. When customers call or email to inquire about the status of an order, the last thing they want to hear is, “I will have to check on that.” Lean manufacturers use a single integrated system and mobile CRM application to put all the information at the employee’s fingertips so they can instantly answer customer inquiries and resolve problems.
- Constantly Measure Your Business Health. A fever is typically an indicator that your body is fighting an infection. If noticed early enough, you can limit the spread of infection and the impact to your day-to-day life. The healthy manufacturing customers I speak with all require the same awareness in their business. Each of them relies on Key Performance Indicator (KPI) dashboard to get in front of money-making opportunities and money-draining challenges before they happen. Measuring your business health through KPIs enables decision makers to:
- Practice evidence-based management
- Predict future actions and results
- Eliminate management by fire
- Encourage changes in thinking and actions
Adam Grabowski is the Director of Marketing for Global Shop Solutions. He is responsible for strategically positioning the company and its ERP software product to make existing customers more successful and compete for new business opportunities in the manufacturing industry.