The Safest Financial Strategy for Manufacturers
The fabrication and manufacturing industries are rapidly changing with the advances in cloud-based MRPs that automate and digitize data flows, support a larger portion of the workflows, and improve task management. But, manufacturing is already a highly competitive industry, and innovation is the key to keeping ahead of the curve.
As exciting as these technological advancements are, they have a profound impact on the manufacturing workforce. Some 80 percent of manufacturers say they have a moderate or serious shortage of qualified applicants for skilled or highly skilled positions. In the next decade, it is expected that as many as 2 million manufacturing jobs will be unfulfilled due to this skills gap.
– Nora Leary, ReliablePlant
In other words, the safest financial strategy for manufacturing industry is to focus on growth.
The mechanisms to achieve this are:
1. Innovate your systems
- Automate everything, and we mean absolutely everything you can possibly automate. The goal is to be as paperless as possible.
- Get the best fabrication equipment, remember, it’s an investment.
- Ensure you are training everyone properly.
So, inefficient systems will waste labour hours that could be spent moving the business forward. Not to mention, they also increase the risks of costly errors.
2. Fix your processes
Everyone has a long list of to dos for their financial strategy that needs to be tackled, and that would make a big difference, but that no one has time to tackle it.
“Every minute you spend in planning saves 10 minutes in execution; this gives you a 1,000 percent Return on Energy!”― Brian Tracy
Therefore, invest in process improvements. Whether this means finding an app that better serves your company’s fabrication needs, or taking the time to better identify each individual job description down to the minute tasks. Make sure to include the people who will be affected in the improvements. Getting their input helps you to understand how your team will respond to the changes, and if it will really be helping them. Don’t be afraid to scratch it all out and start over again where things are broken. But, band-aid solutions are just that; temporary.
3. Ensure you have a long term growth strategy
- The team needs to know your vision and where you are trying to head to. This should be implemented in your onboarding process so that each and every employee that comes in has a clear intent on why they are working for you. Everyone will play a role in how you achieve your vision.
- Don’t be stuck in your ways. Phrases like; “We never do that.”, “We always do that.”, or “Our customers want this.” should be banned from your fernacular.
- Think outside the box. The world is ever changing and your business should be agile to adapt to these changes.
- Think about opportunities for horizontal and vertical expansion or integration.
- Do a SWOT at least once a year to keep tabs on where you are at
4. Review your customers and vendors annually
Don’t be afraid to fire from either parties if it just ain’t working. Loyal customers can bankrupt your business if your pricing strategy is outdated from your growth. But, be aware that customers who take advantage of their standings can also suck the energy out of your teams if they are overly demanding, disorganized or unpredictable. Vendor relationships are key to your cost management. Above all, ensure you are getting the best win-win situation with your vendors. If it’s looking too one-sided, find new vendors!
5. Track, report, adjust
With easier access to data (see section on innovating your systems), ensure that you are tracking and reporting the right metrics, but not just for reporting sake. Ensure that financial strategy decisions are being made based on the results, and that teams responsible for the actions of these results are reacting and adapting right away. Reporting the same disappointing results and discussing the same issues each month is demotivating. So you might as well go buy some cat litter, because getting any traction is going to be tricky.
“In this world you’re either growing or you’re dying so get in motion and grow.”― Lou Holtz
The world has an insatiable need for manufacturing companies in all sectors. Don’t think that just because there are others like you that you can’t find the thing that makes you stand out. If you take into consideration these factors, which could help or hinder your growth, you have great chances of coming out on top!