Do More With Less: Three Sure-Fire Strategies for Manufacturers

Yesterday I told you that I was working on a project that will help manufacturers “do more with less”. I wrote about this in a whitepaper and more recently an article (to be featured soon) but I thought I’d give you a taste of both of these over the next few posts. You can also listen to a podcast I recorded recently where I delve into the topic a bit more.

The gist is that many industries are feeling the effects of our current economic situation, but few as strongly as manufacturing. With market uncertainty, heightened global competition, increasingly stringent environmental regulations, and customer demand for higher quality products at a lower cost, manufacturers are facing a daunting challenge when it comes to maintaining margins and profitability.

Although business models, methods of operation, and products produced by process and discrete manufacturing companies vary, there are several common challenges for organizations of all sizes and locations:

• Manufacturers are highly dependent on fixed assets to produce their products.
• Organizations are heavily impacted by fluctuations in raw material costs.
• All companies are under significant pressure to lower costs wherever possible, especially with a downturn in the market.
  

Finding opportunities for savings—where fixed assets and raw material costs are a constant—is difficult. To survive, it is critical for manufacturers to understand how to do more with less while remaining both effective and efficient.

The manufacturing sector’s senior management uses many levers to control and direct company goals, both short and long term. Management will guide the strategic path of the organization by focusing on initiatives that improve cycle times; increase organizational agility; innovate in process or product; enhance quality; control costs; examine potential effectiveness of planned projects; or implement and enforce compliance to standards. On the path to achieving these short and long term goals, there are some core business fundamentals that must not be overlooked.

The task of guiding an organization’s future will become significantly more complicated with the economic stresses we are presently experiencing. Companies that manage day-to-day operations in a reactionary way, without concern for undermining efficiency, will be at a serious disadvantage. And companies that are continuously “putting out fires,” as a cultural norm, are unready for the serious challenges that this competitive landscape yields. All in all, companies will no longer be able to abuse speed and resources to operate in a reactionary manner. On the other hand, companies that build strategies that focus on leveraging operational efficiency and effectiveness will move to the forefront where they will be better positioned to compete globally.

But where is the untapped opportunity for efficiency and effectiveness? There are three specific areas where I believe organizations can direct their attention to realize cost savings and improved operating margins:

1. Fixed Assets, with emphasis on asset knowledge and the complete asset lifecycle.
2. Administrative Framework, an often overlooked and undernourished aspect of the manufacturing business. The Administrative Framework underpins almost every function within the business, and it is around the Administrative Framework that the value chain of an organization carries out day-to-day decision making.
3. Enterprise Content Management (ECM) and how it impels information visibility across the enterprise.
   

These three areas of focus form the backbone of an organization’s ability to make day-to-day business decisions that directly impact the variable costs and overhead of an enterprise. I’ll dive into fixed assets tomorrow.