In the first of a series of three articles, Pinnacle Software Consultant Matthew James, who works closely with our manufacturing customers, outlines what he sees as the current main challenges facing the sector.
It could be argued that with fierce global competition and the seismic shift that Brexit might bring, the current operating climate for manufacturers has never been tougher. But then again, when have manufacturing businesses ever been able to sit back and take it easy?
In my conversations with Pinnacle customers in manufacturing, five issues commonly arise. Through the strategic implementation of technology, they are seeking to address just-in-time stocking; capacity planning; traceability; accessing shop-floor data; and tracking costs against budget.
Let’s explore these challenges in more detail:
- Just-in-time stocking (aka ‘lean stock’)
Most manufacturers realise that maintaining a warehouse full of stock just in case it’s needed, with the prospect of having to write some of it off, is not the most profitable way to run a business. Equally, sourcing parts and raw materials in the global marketplace reduces costs but lengthens lead times.
How can manufacturing businesses get it right, so that ‘just-in-time’ replaces ‘just-in-case’?
Receiving a major order is always cause for celebration, but do you have the capacity to fulfil it within the customer’s specified timescales?
Can you complete the order with your current resource levels? How do you handle a short-term spike in activity? Do you need to plan in extra overtime or start talking to your preferred agency about hiring temporary staff? In short, how good is your forecasting?
With the regulatory framework tightening all the time, especially in industries such as food and drink and pharmaceuticals, traceability is becoming ever more critical. Defence suppliers, too, must comply with strict criteria governing the source of materials and the export of arms and military equipment.
Manufacturers need to be able to track and trace the source of product components and their ultimate destination. Capturing sales orders, delivery notes, certificates of conformity, warranties and so on electronically all along the way enables you to provide paperless proof on demand.
Shop-floor data mustn’t be confined to the shop-floor. It needs to be easily accessible to authorised users throughout the business, so managers can track the progress of an order and head off any emerging problems.
When a customer calls for an update, the information is then instantly available, without the customer service team having to ring down to the shop-floor.
- Budgeted costs versus actuals
It perhaps goes without saying that to run a profitable business you must be able to monitor the cost to produce an item throughout its lifecycle, not do a post mortem when it’s too late to take remedial action.
Your materials costs, your labour costs and your manufacturing overheads must all be closely scrutinised. You're then in a good position to take preemptive action if costs start to come adrift from the original budget. As always, commercial success is all about exceeding customers’ expectations at a profit.