Posted on April 6, 2021

Top 7 ways manufacturing companies are losing money and how you can fix it

Times are tough for manufacturers, with global trends towards automation and mass customization placing increasing pressure on them to up their game. Coupled with this is the pressure to meet ever more challenging KPIs relating to production turnaround times, quality standards or compliance. The implications of Industry 4.0 for manufacturers cannot be underestimated. 

If a business doesn’t invest in technology or recognize the potential of that technology to drive efficiency, they will at best stand still and at worst go backwards, losing any competitive edge they may once have enjoyed. Thus manufacturers can no longer afford to think about their systems, processes, and labor force in the same way they did years ago. It’s time to innovate and figure out new (better!) ways of getting the job done. 

Through agility  and technology, the manufacturing industry will be able to overcome its challenges and push in a new era for manufacturing. We often see manufacturing companies losing valuable time and resources on processes, workflows and IT systems. In this article we define these processes and explore ways to fix them. 

When technology and business merge, your organization can grow, innovate and stay ahead in an ever- changing market.

  1. Overall manual processes
  2. Logistics and resource optimization
  3. Invoicing processes
  4. Inventory management and warehouse management
  5. Coping with New Technological Advances
  6. Data Integration: The Digital Supply Chain Is Here (digital supply chain)
  7. Being locked-in by current IT systems
 
 
  1. Overall manual processes

Manual tasks and processes can be very time-consuming, this time can be reduced by using automations. Automation takes the weight of repetitive, manual tasks off your teams’ workload. This does not just give you more time back; it also reduces human error probability, thus increasing efficiency and profitability. Furthermore, eliminating repetitive tasks can engage and empower individuals to perform better and with a higher feeling of worth. In this way, your team will not just be more productive and efficient; they may even deliver better work. There are multiple processes that manufacturers carry out that involve both large and smaller workflows. Whether large or small both are impactful to the efficiency and effectiveness of the manufacturers process. Bearing this point in mind, workflows will be covered further in this article. 

By carrying out the right analysis on existing processes, and by using the right tooling, they can be transformed into digital formats giving quick wins and driving effective strategies. 

    2.  Logistics and resource optimization

Logistics costs are a substantial part of an operation. The right systems lets freight operators improve their distribution management flow, from product fulfilment to transportation. Gathering datasets from multiple sources; in-house records, the internet, social media, etc. and display information through maps, charts, and graphs. Improving the physical handling and delivery of goods from their distribution centre, and ensuring customers and clients receive their orders on time. 

The right ERP is a valuable resource for staff maintenance. Freight operators manage employee hours and rest breaks through the software and collect information about staff performance. For instance a cloud-based ERP system provides companies with an additional layer of security. This type of software backs up staff data — payroll, contracts, attendance records, etc. — so users can access information after a power failure, a natural disaster, or a security breach.

  1. Invoicing Processes 

The invoicing process is a great example of one of the core processes in a business that are time consuming and mistake prone, but essential to do right the first time around. In the infographic above you can see an example of a timeline of what the process is like in most companies. 

Building a solution where there is no need to rely on manual data entry and invoicing allows massive gains in time and resources. When an invoice comes in it can be searched and matched with the right purchase order in seconds.

Automating your invoice processing procedure lessens the risk of missing invoices due to human error, enabling you to pay all your invoices by the payment date. Not only do you save money by no longer running into possible late fees on vendor payments, but you also maintain an excellent standing with all your suppliers. This can improve your credit with them in the form of additional funds or better payment terms.

Similarly, your suppliers may offer early payment discounts. To avail of these better invoice management with a streamlined invoice processing flow is a must.

  1. Inventory Management and Warehouse management

We already mentioned logistics but another important part of the supply chain management for manufacturers is Inventory management In warehousing, order planning, receipt of supplier materials and shipment of goods to customers, creating a certain chain that can become complex to manage if the company doesn’t have the most suitable human and technological resources. Without them, the goals for increasing productivity and reducing costs become more difficult to achieve.

We see multiple manufacturing companies dealing with this problem. When your inventory process is not flowing the consequences are big. The right system or platform in place can tell your team what production, supply, and inventory needs are, gauged by product demand. This eliminates the need for individual departments to oversee and maintain supplies, while fostering a continuous and uninterrupted workflow.

Having the right systems in place, integrating and having the power to generate the correct flow of processes, automate where possible and develop with flexibility.

  1. Coping with new technological advances

Many changes in the manufacturing industry have come from consumer demand. Consumers want things faster and better, personalized and unique, and newer than last year or even last quarter. Therefore, manufacturers have had to find a way to keep up not only with the demand for products. Legacy systems built back in the day have worked well for most companies but are not able to keep up with the demands of today. How do you know your new systems are future proof and scalabile? Choosing low-code solutions for our manufacturer customers we are able to achieve amazing results in short amounts of time.

  1. Data Integration

Often the amount of data is not the problem, it’s what you do with it. And how reliable is your data ? We see many organizations working with different spreadsheets and every department their own truths and numbers. Making communication and setting goals very difficult. Many integration problems in manufacturing revolve around supply chain and logistics issues. These problems are often data driven: Inventory management, fulfillment, WIP tracking, etc. Simpler endpoints tend to be most amenable to data integration

And with developments like IOT the amount of data is increasing

As the integration market grows in sophistication, a range of purpose-specific tools based on standards is appearing. This provides the user with an opportunity to obtain better project predictability, more business benefits and reduced TCO by selecting a tool with the proper range of functions and the best price/performance ratio for a particular task. Data integration will play a growing role because it is simple and economical. Proper tool selection, along with well-designed integration architecture is essential for initial project success and control of TCO.

  1. Being locked-in by current IT systems

Some manufacturers will have recognized their inability to keep up with the market without streamlining their processes, but may be struggling to understand what they need to do next. They’ve reached the stage where they need to implement ERP, or upgrade their legacy systems in order to survive and thrive.

Often used is the terminology of  having “Vanilla ERP” . This refers to an ERP system that majorly relies on add-ons to provide (industry-specific) functionality. The software development companies that develop such vanilla ERP products, often referred to as ERP publishers, rely on their resellers to develop industry-specific features. In some cases, a manufacturing ERP project might include dozens of add-on vendors providing different functionality. As a result, you will not have access to a central authority or a single point of contact. You will also face problems in upgrading the software as each vendor would follow their release cycles, and at times may overstep on each other, preventing the upgrade. Not even mentioning the costs part.

We have helped many manufacturers get out of this cycle with the right low code platform solution.  Want to find out more ? Contact us : hi@fizor.io

Next steps?

If you are in the industry and you experience any of these seven common software manufacturing challenges, just know you’re not alone. This list should provide some insight into recurring problems and offer suggestions to fix them with the use of smart IT strategy. Need some help ? Don’t hesitate to reach out via : hi@fizor.io

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