8 examples to boost mid-size manufacturing
Not all businesses have been exported to Asia and taken over by the Chinese, the Philippines or the Taiwanese. Europe still has an exuberant small- and mid-size engineering and manufacturing industry, often family owned. Some are highly specialist making parts for larger companies, some have more complexed and integrated products and system deliveries.
Like any business all mid-sized family owned manufacturing companies are challenged daily. Being ongoing project deliveries, dependencies on certain key customers, challenges with partners, with staff or with a stagnant new sales pipeline.
In this post I will focus on 8 examples to boost manufacturing that I have experienced meeting and working with small- and mid-sized manufacturing companies:
- Benchmark parts and sub-suppliers with competitive price quotations. Building long-term relationships are important, but do not get married with your suppliers. Having others bid for the work on an annual basis give means to challenge your contractors cost structure. Topics you shall discuss and challenge with your sub-contractors are the level of staffing, the degree of automation, the materials cost, inventory turnover, etc. It is your sub-contractor’s responsibility if he/she is overstaffed or have low degree of automation, not yours.
- Challenge your own degree of automation. Today even small series manufacturing can be automated. Welding robots are increasingly cost efficient, in particular if combined with mobile robot platforms. The cost is a few hundred thousand euro giving base for short payback times compared to manual welding. Other areas of interest are packaging lines that can be assembled relatively easy and CNC-machinery that are almost the standard today.
- Look at engineering. There are almost always improvements to be made to simplify manufacturing or to lower cost of materials. Set target, request the engineers to team up with some of the production staff to jointly solve the set target, and reward when succeeded.
- Move engineering staff closer to production. I started of my own carrier as an engineer at ABB sitting at an office complex with my engineering colleagues. Great competence and great support from elder colleagues. However, the boost came when we decided to move the engineering team to the shop floor just next to construction. Miracles happened.
- Consider to relocate manufacturing back to Europe if Europe is your primary sales and engineering base and where your customers are. Salary arbitrage is still in favor of Asia but a total cost analysis can be quite interesting, especially if automating as much as possible. Cost and not least lead-time for shipping will be heavily reduced, with the later improving your flexibility for change orders and allow bidding for projects with tight delivery schedules (and hence than also allowing for less manufacturing staff if shipping will not consume most of your total time for delivery).
- Look at quality. ISO 9000, ISO 14000 and ISO 50001 standards and other engineering, process, manufacturing and environmental standards are not only a hygiene component or needed evil to bid for certain projects. Quality errors are costly and a focus on your poorest sub-contractors degree of non-100% deliveries or your own error rates not only improves your brand and reputation but also increase your margins.
- Improve contractual forecasting in order to optimize your manufacturing shop’s utilization, staffing and materials handling. Nothing is as costly and annoying as overly tight delivery schedules or temporarily low utilization of resources.
- Appoint a Production & Quality Manager if you do not already have that. Someone other than the chief engineer or the business area head need to devote full time to above issues, and your company will prosper.
Thank you for reading. Please feel free to like, comment, share, tweet, email, etc. Hopefully the Pareto principle, also known as the 80-20 rule, will apply. I.e. 80% agree and 20% challenge me constructively.