Investing in a manufacturing company – and/or operating a manufacturing company – in the current economic climate represents both opportunity and risk as U.S. manufacturing demand and profitability are accelerating. If you have been in the industry longer than a decade, you have experienced the reshaping of the entire economic sector.
According to the MAPI Foundation, U.S. Manufacturing Predicted to Regain All Output Lost in the Great Recession by April 2019. “The U.S. Manufacturing sector finally has a range of recovery tailwinds that are catalyzing its increasingly sunny outlook.” The manufacturing sector is “poised for its strongest output growth performance in more than a decade.”
The graphic to the right from the MAPI Foundation’s latest report illustrates just how quickly manufacturing demand and profitability are accelerating.
The manufacturing sector has worked through a re-tooling from economic factors and workforce displacement to a new era of technologies including the IoT (Internet of Things) and Industry 4.0. Now is the time to refocus on activities which will balance your risks with your projected rewards. You need to grow sales through additional revenue and increasing profitability.
Driving Sales Growth
Sales growth comes through additional business from existing customers as well as new business from new customers. The most challenging growth to attain is from new products in new markets. The most reliable path to additional revenue is to partner with existing customers and win more of their business, expanding your role as a trusted, high quality supplier. Excelling at supply chain management improves the transparency and trust between suppliers and customers and by providing real-time data, increases the competitive advantage suppliers have in their served markets. Investing in and excelling at solid, scalable supply chain management practices is the best approach to creating and strengthening a reputation for excellent product quality and for being a supplier that always delivers. Measuring your progress towards the goal of excelling as a supplier provides the needed analytics, metrics and KPIs that are essential for providing direction and intensity of effort in your company’s culture to always excel. Analytics, metrics and KPIs, once owned by employees, are a powerful force for increasing production efficiency and strengthening a culture of operational excellence.
How to Drive Manufacturing Growth
- Customers respect and value you as a supplier because you understand, respect and work hard to contribute to their business success as a supplier. The higher quality of products and services you can provide for the value will solidify your position as a supplier of choice. Customers (existing and new) are interested in your capabilities to provide compliance to standards, and documentation to prove your commitment. Automotive and medical standards are explicit about these, but any manufacturing company needs to have a solid quality system with document control. Adherence to ISO (International Standards organization) is generally accepted across the manufacturing industry as a guarantee of consistency.Your commitment may also take the form of a consultative role, participating in product design, “manufacturability”, packaging and logistics. As a manufacturer, you have the expertise; guide the customer with the right questions and articulate the plan. Expectations for the relationship must be aligned and communications must be clear in order to achieve the greatest efficiency in the relationship. If supply chain partners have visibility through system dashboards and portals, the flow of documentation and communication is immediate and easily accessible.
- The market is always looking for faster, better, cheaper and it’s quality that always wins above all else.Customer satisfaction means that expectations are greater and timing is tighter, with no price increases, or even built-in price reductions. In addition to all of these challenges that manufacturers face daily, staying focused on and excelling at quality is by far the most important. Short notice change-overs and on-time delivery are paramount, so it’s imperative to have a great scheduling application in your ERP so you have real-time visibility into manufacturing operations and the tools to make the right decisions quickly. By building in this access and capability, your leadership exhibits a culture of excellence and offers the workforce the unique foundation to achieve the quality and service levels that drive growth.Responsiveness to changing circumstances, whether an incoming shipment of raw material is delayed or a mechanical failure impedes production, makes the difference in the relationship. Sharing and communicating with the customer demonstrates the openness and transparency required in a collaborative environment. Underscoring all of these areas is a solid, unshakable foundation of quality that suppliers can rely on to upsell existing customers and win new ones.
- Everyone sells and everyone serves the customer, from sales, marketing, program management, production management and services.Nothing ever starts until an order is received, and that’s why everyone in a manufacturing company must always stay focused on how their job relates to serving the customer. Your workforce culture must support the service level expected in today’s customers’ requirements and their future plans. In addition to building the product faster, better, cheaper, and tracking the variables, and you must provide your teams the tools they need to get in front of the business and stay there. Your CRM must support customer service as well as contact and contract management. Whether prototyping, tool-building or building blanket orders for years-long contracts, they need the same visibility and responsiveness as needed on the shop-floor.Systems capable of integrating quality and documentation, while providing visibility into scheduling and procurement variables for your customer-facing teams also provide industry players the confidence in maximizing the value of a potential merger or investment.
Manufacturers face information-based challenges which need to be seamless through the supply-chain and transparent to your customers. Inefficient use of resources, deficiencies in technology and lack of production capabilities can not only inhibit growth; these same factors can cost money.
Your market and your customers all face their own challenges and while changes such as material price increases (e.g., tariffs, etc.) can sometimes be passed along, usually operational adjustments to improve efficiencies must be made to absorb at least some portion of the impact. Operational efficiencies can take the form of “lean”, “just in time”, and “continuous improvement” but without applying the necessary tools, themes are just words. A culture committed to excellence in operations, production, and sales will support growing markets with existing customers and guide the path for new opportunities.