Daily Archives: January 10, 2013

Five Common Sense Ways to Power Manufacturing Growth in a Down Economy

Last summer, Industry Week ran a short article on Ways to Power Manufacturing Growth in a Down Economy that you might have overlooked, as it was short and ran during peak vacation season, but it is quite important nonetheless. This article provided some easy ways to squeeze more value out of your operations.

  • Reduce Market Uncertainty
    There are two big uncertainties that most manufacturers have to deal with: customer demand and supply availability. In addition, raw material costs can often be unpredictable. But all of this uncertainty can be greatly reduced with long-term contracts. As the article points out, demand certainty at reduced margins is often better than demand uncertainty, especially since innovation and lean improvements can often reduce costs year-over-year.
  • Put Safety First
    Accidents cause downtime and result in reduced yields, both of which increase operating cost and eat up margins. Keeping lines up and yields constant is the best way to reign in costs and get the most out of every dollar.
  • Near-Source
    Reduce shipping costs and gain more control over manufacturing processes and costs by using suppliers closer to your manufacturing facility. It’s a lot easier to work out a problem with a supplier in your own state than with a supplier in a different country, as you can just jump in the car and visit the supplier’s location when a face-to-face meeting is needed to resolve an escalating situation.
  • Redefine Value-Add using Customer Value
    Find out precisely what customers want and eliminate all unnecessary features and functions that are not desired by the end customer. It’s not value-add unless the customer wants it. If the customer doesn’t want built-in auto-correct software that messes up 20% of the time in their smartphone, don’t waste money delivering it to them!
  • Encourage Innovation
    Empower, motivate, and reward employees who identify product and process improvements throughout the organization that increase quality or product value (to the end customer) while holding steady or decreasing costs.

The point is that, even if demand is down, margin can still be up.