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Growth is usually seen by manufacturers as a good thing—a sign of success and a result of hard work. But if this growth isn’t planned for, or the manufacturer can’t react in time, growth can cause the same devastating results as if the business was in decline.
Regardless of the sector, manufacturing in general is a constant juggling act. It’s tough to keep everything moving the way it should do, which is why you rarely hear factory managers tell you that running a factory is 'easy'.
So, what kind of challenges do they face when business is booming? And how do they overcome these pressures while making sure they keep all the other plates spinning? In this article, we look at seven common areas that can cause manufacturers a headache when their business is growing, along with solutions to help ease the pain.
Supply Chain Management
When a customer increases their order book, particularly without prior warning, extreme pressure can be put on the supply chain to keep up. This can be particularly challenging when bespoke or ‘drawn items’ (precision metalwork, plastic parts, printed circuit boards, etc.) are involved as they don’t tend to be held in stock in any great quantity.
In order to control the quality of supply, manufacturers often try and limit the number of key supply partners they work with. But as demands on the supply chain start to increase, issues with deliveries and in some cases, quality can arise. These issues become heightened when the number of key suppliers the manufacturer works with is very small—there’s simply nowhere else to go.
Problems further down the supply chain not only impact the manufacturer’s ability to fulfil existing orders, they can also have a negative effect when it comes to winning new business. If a supply partner is already at maximum capacity and struggling to cope with existing demand, the thought of submitting a new quotation for another project is unlikely to be a priority for them. Which, unfortunately, means the manufacturer could then miss the request for quote (RFQ) dead-line their customer has requested.
When it comes to supply chain management communication is key. Where possible, manufacturers need to share their demand forecasts with their supply partners. They also need to make sure they are being supplied this level of information from their customers. Holding regular business reviews with suppliers to discuss fluctuations in demand (both up and down) can help make sure that any potential disruptions to the supply chain are mitigated. And while you are there it’s also a good idea to sense check any stocking agreements that you have in place with the supplier. Are they holding the levels of stock they committed to originally or have they been running things ‘lean’? If they have, even the smallest increases in demand from you could have a significant impact on their ability to supply.
It’s certainly not ideal but if things have gone too far the manufacture may have to step in and provide their suppliers with a list of priorities so they can deliver the most urgent (or disruptive) items first. This is usually a last resort action, but it can help focus short term attention in the right direction, particularly if some of the orders that are being placed are actually for stock as opposed to firm customer demand.
Manufacturers should also regularly audit their suppliers and the capabilities and capacity they have to offer. Where are the gaps and how much of a risk do these present? Can the supplier offer what you need both now and in the future? If not, it’s time to start looking at alternative options before the decision is taking out of your hands.
This can be an issue for manufacturers when demand for one particular service offering or ‘capability’ suddenly increases, stripping out internal resources. Machine builders, for example, rely on having highly skilled time-served panel wiring staff in place. But if demand for this resource suddenly increases without prior notice, the manufacturer will struggle to recruit the right type of labor they need in time. Quite often, this forces manufacturers to hire in temporary labor through specialist agencies to fulfil contracts. Not only is this an expensive solution, finding highly skilled time served staff is extremely difficult in the current climate and can take time.
Again, close communication with the end customer and forward planning based on forecast information can help. If the customer cannot wait the revised lead-time due to their increase in demand and the manufacturer has to resort to short-term external labor, a discussion between both parties about the additional costs incurred will need to take place.
Investing in New Equipment
Production equipment and tooling can be expensive so decisions on what to invest in and when need careful consideration. Manufacturers will be constantly reviewing which equipment they need in order to maintain their own productivity levels but also what equipment they will need in the future to meet the evolving demands of their customers.
Holding regular technology review meetings can be a useful way of understanding more about the end customers’ strategy and how this might impact new products in the future. Gaining this level of insight isn’t easy, particularly if there are concerns by the customer around Intellectual Property, but if manufacturers are able to extract this information from their customers it can be extremely useful when considering future investment.
Attracting new talent into engineering and manufacturing is an on-going challenge for business owners. Whilst greater media coverage featuring ‘good news’ stories are helping to slowly eradicate negative perceptions of manufacturing (apparently, it's not all dangerous, dirty and low paid work), finding the right people at the right times is still tough. Now more than ever it’s important for manufacturers to consider all the options available to them in order to ‘grow’ their own talent. Apprenticeships, placement schemes and graduate opportunities can all help but the results of these campaigns won't be seen straight away. These types of training and development schemes can take anywhere between two to five years before staff are fully functional, which is a big commitment for the manufacturer and needs careful planning and progress monitoring along the way.
When a manufacturer starts to outgrow their facility they usually have a few options—expand what they have, invest in more space or take a long hard look at what they are doing internally. There are pros and cons to each, the key question for them to answer is 'what will our customers expect from us in the next xyz years'?