10 Must Dos for Small to Medium-sized Manufacturers

An integrated, flexible ERP system can improve scheduling, inventory, parts

Canadian Metalworking January 2017
February 2, 2017
By: Adam Grabowski

Whether your company is a medium-size to large manufacturer or a small job shop, performing these 10 common must dos will enable you to cut costs, operate in a lean and efficient manner, and maintain a commitment to excellence.

Accurately viewing and scheduling shop resources, outside processes, and material requirements while estimating lead times for jobs saves time and frees up valuable human and machine resources.

Editor’s Note: This article is based on the Global Shop Solutions whitepaper “10 Must Do’s For Small- To Medium-sized Manufacturers,” and is available for download at www.globalshopsolutions.com.

The world has never seen a more competitive and accessible marketplace, so manufacturing companies must operate as lean as possible to maintain profitability and a healthy bottom line.

Whether your company is a medium-size to large manufacturer or a small job shop, performing these 10 common must dos will enable you to cut costs, operate in a lean and efficient manner, and maintain a commitment to excellence.

1. Lower Labour Costs
To compete globally, especially for North American manufacturers, labour costs must be kept to an absolute minimum. This doesn’t mean paying people less; it means spending less time on wasteful activities. Speed up setup times, measure employees’ productivity, and reduce indirect labour and red time to lower overall labour cost.

This can be accomplished by making the best use of real-time data on the shop floor with touchscreen graphical user interfaces (GUIs) and bar-coded work orders that let employees know what they are doing as they do it.

To minimize labour costs, you need to precisely track indirect labour too.

You can save on both direct and indirect labour costs by going mobile. Mobile materials management eliminates the need to record material handling records on paper and then manually transfer them to a computer. Using wireless technology to track raw materials, inventory, tools, and finished products from anywhere in your production plant using a hand-held wireless device gives employees the best tools to do the best job possible.

2. Cut Cycle Time
Competing means having a short cycle time and compressing the time between the sequences in your manufacturing operation. Some companies have been able to cut cycle time by up to 50 per cent by automating processes and using flex schedules with their manufacturing software. For example, the ability to access and analyze capacity data by work center and individual machine allows for sequential scheduling of like jobs to reduce setup and breakdown times.

And because every company runs their business a little differently, each manufacturer typically requires a customizable software package. Modifying existing screens gives you enhanced functionality and capabilities, and creating new, custom screens for specific employees enables improved data visibility that matches your business needs.

You also should customize your ERP software to meet your specific manufacturing reporting and scheduling needs.

Having a single, integrated software system means that data is entered into the system one time and one time only.

3. Automate Scheduling and On-time Delivery
Manufacturing companies that are trying to turn the corner on efficiency mostly say they spend too much time on scheduling. Lean manufacturers reduce scheduling time automatically, saving time and freeing up human capital to spend more time on calling customers, implementing new ideas, and proactively managing the business. And because every manufacturer has different processes, machines, and philosophies, the increased efficiency from automating scheduling also requires customization.

You can improve customer service – and on-time delivery – by accurately viewing and scheduling shop resources, outside processes, and material requirements while estimating lead times for jobs.

Using advanced finite/infinite scheduling creates what-if scenarios when you are moving jobs around to meet customer due dates. Maximizing tools, materials, and labour efficiency while offering customers reliable quotes that reflect real-time data can be achieved. Accessing the information you need to get every job done on time and on budget for the highest levels of efficiency and productivity is possible.

4. Automate Purchasing
It’s a good idea to automatically import and consolidate every work order and all inventory information to make smart purchasing decisions based on real-time data. This way you can easily forecast future purchases based on customer history and instantly see new purchasing actions that may be required when entering job changes into the system.

Going totally paperless can create even more cost savings.

The most successful manufacturers rely on automated purchasing so they know when to buy parts and in what quantity. The guessing game disappears, and you can spend most of your time improving price and delivery, decreasing inventory, and reducing obsolescence.

5. Quote Quickly and Accurately
If you are an efficient manufacturer, the jobs you win result in good profit margins. The most successful and efficient manufacturers take all the guessing out of the quoting process by using an automated system for pricing and quoting anything they are manufacturing.

The only way to quote with confidence is by tracking job costs with precision.

Reviewing comprehensive quoting histories by part number, product, and customer tells you the estimated versus actual costs and margins for every job that runs through your shop floor. It also shows all purchasing data to identify fluctuations and trends in materials prices. Again, since every business is different, automating your quoting process requires customization of your manufacturing software.

It’s simple: The more jobs you can quote and the more accurate those quotes become, the more jobs you win.

Mobile CRM applications put business, manufacturing, and sales the information at your fingertips so you can instantly answer customer inquiries and resolve problems.

6. Have One ERP System
An integrated ERP system provides a central organizing hub for all the data required to manufacture your product, get it out the door, and handle the accounts receivable process. It makes all the systems and processes more visible, and puts all employees on the same page at the same time with the same information. Employees can perform their jobs more efficiently, and management can make better-informed, real-time decisions.

Maintaining separate payroll, accounting, customer relationship management (CRM), inventory control, and other discrete software programs wastes time and opens the door to inaccurate data.

Lean manufacturers manage the entire manufacturing process with a single, integrated system that handles all aspects of their business from quote to cash. Data is entered into the system or captured by the system one time and one time only. The information then becomes available, or is pushed, to anyone in the company at any time, based on system security and permissions.

7. Reduce Spreadsheets and Paper
It’s a little-known secret that most manufacturers want to be tree huggers.

Paper on the shop floor is slow. The more paper and spreadsheets on your shop floor, the more hunting, pecking, and lost time you have. Lean manufacturers increase efficiency by reducing paper and spreadsheets.

An integrated ERP system notifies employees which job to run next, or the employees view real-time dispatch lists on the shop floor. There is no more asking supervisors for directions or hunting down paperwork. All the information regarding the next job is available at the touch of a button, click of a mouse, or glance at a screen.

Also, if you use electronic data interchange (EDI) to electronically receive purchase orders, job changes, job specs, and other documents from customers and vendors, data is automatically populated throughout the system, eliminating the need for manual data entry and paper copies.

The more automation and “paperlessness” you want to achieve, the more customization is required from your business software.

8. Maintain Accurate Inventory
Inventory often represents a black hole for cash flow. You can protect cash flow by knowing your inventory. Moreover, you can integrate your inventory with all the other processes so you can manage it in a highly efficient manner. This requires a single, integrated system that offers all the functionality to keep your production line supplied with the right materials at the right time.

It’s of utmost importance to track every aspect of your material needs, from detailed inventory data to bill of material (BOM) cost buildups. You should review and analyze only real-time inventory data for accurate management of production materials. Integrating the material ordering system with your inventory and usage by setting up automated purchasing based on material requirements, planning functions, and purchase history is one way to ensure you have the proper inventory levels.

From multi-location inventory and history/usage reports to cycle counting and product line reports, material inventory tracking is made easier and more accurate if there is one point of data entry that is then shared among those that need the information.

9. Delight Customers
Repeat orders happen when customers are serviced truthfully, quickly, and accurately. When customers call or email to inquire about the status of an order, the last thing they want to hear is, “I will have to check on that.”

You can use a single, integrated system and mobile CRM applications to put all the information at your fingertips so you can instantly answer customer inquiries and resolve problems.

Instantly access invoicing, job status, shipments, and quoting data in real time, for all areas of your manufacturing operation, is the key here. Use what-if scheduling to give customers quick answers when they request job changes or accelerated due dates. Remember, your customers work more efficiently when you safely and securely give them access to specific data regarding their jobs within your system.

10. Constantly Measure Your Business Health
A fever is typically an indicator that your body is fighting an infection. If the fever is noticed early enough, you can limit the spread of infection and the impact on your day-to-day life.

Healthy manufacturers require the same awareness, but of their business. They rely on key performance indicator (KPI) dashboards to get in front of money-making opportunities and money-draining challenges before they happen.

Measuring your business health through KPIs enables you to:

• Practice evidence-based management.
• Predict future actions and results.
• Eliminate management by fire.
• Encourage changes in thinking and actions.

Accessing customizable graphs, charts, as well as detailed information regarding margins, product lines, sales trends, and financial performance enables you to create forecasts based on reliable data rather than gut feel.

It also helps you use detailed historical data to determine the appropriate product and customer mix and analyze productivity reports to identify opportunities to cut costs and create a leaner operation.

Adam Grabowski is director of marketing, Global Shop Solutions, 888-605-2712, www.globalshopsolutions.com.

Adam Grabowski

Director of Marketing
Global Shop Solutions

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Canadian Metalworking

Canadian Metalworking

Founded in 1905, Canadian Metalworking is Canada's only national, monthly magazine dedicated to complete coverage of the metalworking industry. Our topnotch editorial covers a wide range of topics, including machine tools, cutting tools, metals, automation, software, quality, and more.

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