We have worked with many business owners in the manufacturing business since our start in 1999. Over the years, we have noticed many trends in the manufacturing business that lead to better and higher profits.
Take a look at these 7 tips that will help you grow your business and improve your profits.
1. Manage Workload Effectively
Performance is everything in the manufacturing business. If your employees are too overwhelmed with their current workload, they will no longer be able to produce quality work.
Many business owners are hesitant to hire on new workers or expand production lines because of the cost. Without this, your production, brand, and overall reputation will suffer.
It is crucial to take the time to understand the capacity of your business and the effect that new or incoming order will have on it. This will help you come up with a plan of action so that you can manage your workload quickly and efficiently.
2. Instill Consistency & Discipline
In order to produce quality goods quickly, it is crucial that you create effective routines. These routines must be thought through with consistency and discipline in mind. Without these two traits included in every step of the production process, your plans will be no good to your business’s growth or reputation.
What many manufacturing businesses overlook when creating routines is to make them realistic. Many business owners are overly ambitious and forget to consider the power of their own team. To make these plans as realistic as possible, speak with general managers and your strongest workers in the field to create a plan that is feasible for everyone.
3. Have A Team Meeting Each Morning
To get your team motivated about your new plans, hold a team meeting each morning. Morning meetings, or “Sunrise Meetings”, are not anything major. These brief meetings typically last anywhere from 5 – 10 minutes and are designed to inform the team of changes, goals, or any form of motivation that you’d like to share.
These meetings help your team identify the problems that need to be fixed and the parts of production that are going great – easily allowing everyone to be on the same page every day.
4. Use Process Key Performance Indicators
Using key performance indicators, or KPI’s will help you keep track of the four following elements:
- Revenue improvement
- Cost reduction
- Process cycle-time improvement
- Increased customer satisfaction
By taking a deep look into these four elements, you will be able to know what has already happened in your business, so that you can know exactly what needs to be happening now.
These are great facts to bring into your morning team meetings. Proving what you say with hard numbers will let your team know exactly where improvements need to be made and will show them how involved you are in your manufacturing business.
5. Correctly Set Up and Manage Your MRPII
Most manufacturing companies use MPRII systems (Manufacturing Resource Planning) to help them plan the work through the business.
A properly set up and managed MRPII can help reduce administration, minimize stock levels, and deliver your products on time. If you avoid or incorrectly manage your MPRII’s, you could face producing the wrong quantities and delivering late products.
7. Keep On Top Of Finances
Your finances are a major part of your profits. Without proper management of your cash flow, your business can suffer greatly.
Because of the invoice-based payment nature of your the manufacturing industry, you constantly struggle with your cash flow. There are many forms of alternative financing that can help reduce stress and increase your source of working capital.
Manufacturing factoring helps business owners get cash for their outstanding invoices without incurring any additional debt. With manufacturing factoring, a factoring company will purchase your invoices for a small fee and advance you up to 96% of its total.
Non-recourse manufacturing factoring, also eliminates the risk to your business’s credit. Because the factoring company purchases your invoices, they take on 100% of the credit risk if your clients.