Running a manufacturing business isn’t easy. That’s not to say that it’s a lot more complex compared to other types of businesses. But manufacturing involves the production of physical products which means managing materials, labor, equipment, supply and demand, and logistics. Poor management in any of these areas can result in low profitability or, worse, a failing business.
To properly manage a manufacturing business, you’ll need to learn how to shift and adapt in new and changing ways. Below are some steps that should help you push your company towards continued growth and profitability.
1. Set the Direction
Before you can push your company towards success, you have to know what goal you’re aiming for.
What are you going to manufacture? Where will your products be manufactured? Is the company going to be responsible for manufacturing all the parts or will some of them be outsourced? What kind of equipment will you need? Have you thought about your production targets? What is your production capacity? Is there market demand? Does your production timeline match the current demand?
The answers to these questions and more should be found in your business plan which will serve as the foundation on which your company will be built.
2. Focus on Inventory Management
Inventory management is critical in a manufacturing business. Your inventory is not just made up of your products, but of materials and parts you need to manufacture your products. Organizing and keeping track of all of these items that move in and out of your inventory from a variety of suppliers requires time and money. Not to mention, management of your inventory can impact production efficiency, product quality, and product costs.
One of the most important things you need to keep in mind here is supply chain management. Whether you’re dealing with local or overseas suppliers, you need to ensure that your supply chain is watertight. You should have backup plans for any breakdowns such as when a supplier suddenly stops production of a certain material or part. This could mean keeping a safety stock or an alternative supplier on hand.
That being said, don’t invest too much in your inventory. Having more inventory than you need may seem like a good idea, but if it stays on the shelf for too long, you end up losing money due to operational costs. Find a way to accurately calculate when people will reorder or when the market need will rise, so you won’t need to have inventory lying around all the time.
Next, make sure your production line is optimized. Lost seconds can add up to lost hours which means unnecessary costs. There are a few things you can do to ensure workshop productivity:
- Make sure your production floor is clean. Have any dirt and debris swept away and any garbage removed at the end of each workday. In addition, ensure that there is always proper lighting. A clean workspace promotes productivity.
- Have everything in the workshop organized – a place for everything and everything in its place. Your workers will lose precious time if they need to rummage for their tools or materials. The most commonly used items must be easy to access. Create systems of storage and make sure that everyone in the workshop understands as well as follows them.
- Create clear policies and guidelines that help the staff understand the standards you are setting. These will also help sustain the “habits” you want them to form – cleanliness and orderliness.
4. Invest in New Technology
Manufacturing technology is constantly evolving. If you want your company to remain competitive, you’ll need to invest in new technology as soon as you are able.
For example, some manufacturing companies have adopted additive manufacturing to streamline their manufacturing process, simplify their supply chain, and lower their costs. A few have even implemented a new business model – a 3D printing online service that allows them to sell directly to consumers.
The most successful manufacturing companies are the ones who aren’t afraid to embrace the future.
5. Implement a Competitive Sales and Marketing Strategy
Growing your manufacturing business means getting more customers. Naturally, to do that, you’ll need to get people to learn about your business and what it has to offer. Your sales and marketing strategy should ensure that your target market is aware of your brand, your products, and how both of them stand out from your competitors.
There are plenty of ways to get the word out about your business – email, social media, videos, blogs, etc. But the content will depend on how you want your brand to be perceived. Are you claiming fast production and delivery? Make sure that your production team is aware and capable of delivering. If you want to say that you offer low-cost production, then you also need to make sure that it can actually be done.
In short, your sales and marketing strategy should use input from your sales and marketing team as well as your production team.