Why manufacturing firms need to change with the times

Is it fair to say that many companies do not have the basic controls and tracking systems that provide visibility of costs in terms of ordering, warehousing, transportation and other expenses? That UK industry is wasting millions of pounds with equipment mark-downs, write-offs and lost revenue; all of which, according to industrial distributor ERIKs, is down to poor maintenance practices?

It is true to say that manufacturing has gone through a huge change. Gone are the days where stock is kept and materials bought in bulk just in case they were needed. The recession forced companies to really evaluate and measure, to save costs wherever they can, to make materials go further and be bought at even cheaper prices.

Yet, it is taking some more than others, longer to move with the times. Many family-run businesses and medium sized firms that have been in operation over the decades, and survived, have struggled to keep their heads above water, let alone invest in new approaches which could have saved them time and money over the years.

It is a difficult balance for companies; investment verses coping with every-day costs and operations. Managing staff and putting time in to re-training when everybody is stretched to keep the machine and jobs going, has rightly been the focus.

Manufacturing2But, it is a balance and it is about taking stock, understanding the true position and state of a company’s operations to be able to see the gaps, to implement improvements that can demonstrate a real return and more profit to the bottom line; to survive another decade and beyond.

Many businesses that we support, particularly in manufacturing and distribution, are really focused on reducing production downtime. As we all know, time is money and if the machines aren’t producing or there’s a glitch in the distribution network, it has a huge impact on sales, cash flow and ultimately profit.

And businesses are investing in resources to aid growth. A recent Guardian barometer showed that more than 80% of UK manufacturing firms were planning to spend on capital equipment before April 2015, with an average spend of £121,000 per manufacturer. Our firms are not only confident in the short-term, but can see sustained growth and are now prepared to invest more heavily in positioning themselves to take advantage of new opportunities.

But, what is behind driving for greater efficiency, better stock management, consistent production systems and reduction in administration? It’s the driver of customer loyalty, as competition grows. What companies are achieving by streamlining operations is not simply just about profit – without customers that would not be achieved – it’s about improving and managing the customer and supplier relationship to drive business forward. Those firms that are focused on the customer will ultimately be the winners.

The difficulty lies in change and how companies and employees alike respond to that change, just as this is true with any ERP implementation. Change is good and better operational practices and systems actually, contrary to popular belief, do engage staff, do demonstrate a company’s commitment to making their daily working tasks easier, do take a considerable amount of the administrative burden away and do help to instill a sense of pride in working for a firm that is focused on progression.

It is probably fair to say that companies do lack the basic controls and tracking systems, but it’s unfair to be too critical of a fraternity that is working hard to do their bit for the economy. But, they need to explore, look at the solutions and systems available to them in order to thrive. Manufacturing and distribution firms, whilst now enjoying a renaissance, can’t afford to be complacent; they must use this time to improve and move forward.

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