Six challenges manufacturers face and how to solve them now and in the future

The manufacturing world is changing rapidly to keep up with dramatic shifts the world has seen in past years. Whilst many of these changes bring new problems and amplified challenges to manufacturing businesses, they also present new opportunities and ways to stand out from the crowd by dealing with these new challenges rapidly and professionally.

If you want to make the most of your manufacturing business in 2022, you must prepare for these changes. In this blog post, we'll discuss some of the biggest challenges, solutions, and tips on how you can adapt your business to capitalise on these changes. So if you're looking to stay ahead of the curve, read on!

Supply Chain Challenges

Manufacturing supply chains have experienced challenges at every level. Material shortages, lack of transport for the available goods, and late deliveries are becoming the norm.

Material shortages result in:

Inability to fulfil orders
Late delivery
Over budget production
Restricted growth potential

Logistic shortages result in:

Factory down-time
Unreliable lead times
Increased transport costs

Supply chain solution

Strength in numbers

Having multiple suppliers is a solution that can be either a rapid decision or a timely exercise.

For example, you have an enquiry, and they need delivery in 14 days. Your go-to supplier can't deliver for 16 days. Which scenario sounds better to you?

Scenario 1:

You ring/email a hand full of hopeful suppliers who take your details and say they'll get back to you unless you strike lucky.

Est time: 1 1/2 hours

Scenario 2:

You go to your parts inventory item, view the supplier database, select 'stock request email template', and instantly send it to all the suppliers.

Est time: 2 minutes

The multi-supplier solution was managed with software that could:

Monitor your inventory
Store specific supplier details
Have email templates
Send emails directly from the same system.

Prepare for supply chain issues

Create a directory of suppliers, contact details, order processes and costs.

NOTE* Multiple suppliers often come with varied costs for products and delivery. Please make sure they are all within profit-making brackets or complete this process by creating a Bill of Materials before supplying quotes, so you can adjust costs to maintain profit margins and markups.

Labour Shortage Challenges

Skilled and unskilled labour shortages have been detrimental to the manufacturing industry and predicted only to worsen. Employees leave for more advanced businesses, offering streamlined work processes or career changes for easier work or higher pay.

The average Amazon delivery driver earns £26,500 per year.

Lack of streamlined processes result in:

Unorganised high-stress environments
No sense of achievement

Lack of competitive pay result in:

The lure of higher pay
Harder to create a healthy work-life balance

Labour shortage solutions

Manufacturing business software

Invest in tech solutions to streamline processes, making the job less manual. The increased organisation will allow employees to know what they should be doing and when. With time assigned to tasks/projects, employees will know when they are performing well, boosting a sense of achievement and job satisfaction.

NOTE* People will choose great working environments over minor financial gain.

Increased pay or bonus schemes

Increased pay can only come from making more money unless your business can handle a net-profit deduction. To achieve this, improve marketing efforts. Even minor changes to your website performance, directory listings, and social media efforts can result in dramatic uptakes.

Bonus schemes, especially linked to productivity, are a great way to retain staff, increase job satisfaction and purpose whilst benefiting the business and increasing production capacity.

Hiring campaigns

Regardless of business size, hiring is always a lengthy and costly task. You can use job boards, recruitment agencies and outreach to help attract new hires. Utilising software such as Zoho Recruit to manage recruitment needs, automate applicant flows to short-list, contact and hire.

Prepare for labour shortages

Build a relationship with a temporary recruitment agency or create a network of reliable sole traders. Failing this, a sub-contract engineering business that can fulfil orders to the quality expected by customers.

Personalisation & Bespoke Product Challenges

In a world where even Starbucks coffee is personalised, the expectation for product variations or personalisation couldn't be more prevalent. Manufacturers have to be increasingly flexible to customer requests and make-to-order.

Bespoke product requests result in:

Varied product margins
Disruption to build process
Increased quote time

Bespoke products solution

Editable Bill of Materials (BOM)

This solution can be a complex spreadsheet or a software solution linked to your inventory system. Having the ability to raise a product bill of materials, select and de-select items to meet the customer requirements and most importantly, edit part markups to ensure the final product still meets benchmarked profit margins.

Prepare for bespoke requests

Manage the build process to assemble essential components first to reduce downtime. Build elements that can be removed, added or interchangeable should be fitted before testing and dispatch.

New Business Challenges

New business isn't a challenge unique to the manufacturing industry. Manufacturing services both to trade and the public require various marketing channels such as:

Search engine traffic
Directory sites
Display advertising on trade sites
Sponsorship
Social media
Events & conferences
Job lead sites (such as Qimtek.co.uk)

If you don't have a marketing team, the time to do all this, or know where to start. We strongly suggest starting with the methods that can be outsourced and provide the most significant return on investment.

Labour shortage solutions

A clear, well-functioning website detailing what services you offer, your capabilities, industry accreditations and a gallery of work examples is the place to start. Allowing your business to generate leads by ranking on google, having a Google business profile, informing directory traffic and providing easy to use methods of contact.

Preparing for a lack of new business

The key to this is scheduling and knowing your capacity to provide accurate lead times and when you may need to search for work. A popular method for acquiring work is bidding or tendering. Winning contracts for work months in advance that is likely to fill capacity for a considerable length of time is a great way to have healthy forecasts.

Technological Costs Challenges

Implementing software, especially one that alters your business process, can cost your business before it begins to see the returns both in time and monetary value.

So we'll look at the options to help your business benefit from software at an expediated rate.

Time

Whilst you can't create time, you can become more efficient, which is the purpose of the software. Hiring software consultants or making the most of the teams provided by the supplier reduces implementation time and ensures correct setup and configuration. Nominating a team member to champion the training, system management and work with your supplier is a standard method of software introduction.

Cost

When buying a system, there are usually two pricing models available:

Flat fee:

These are generally large amounts with a small monthly support fee.

Software as a Service (SaaS):

Predominantly, cloud software is provided for a monthly subscription cost based on the number of users or features you require.

The challenge is determining which suits your businesses cash flow and financial situation. The subscription model comes with the benefit of potential change with a smaller loss, assuming the agreement doesn't have a long fixed-term contract.

Technology cost solutions

Every business is different, and the solution is to find the software that meets your companies requirements. Begin your journey on helpful sites such as Capterra, GetApp, SoftwareAdvice and SoftwareSuggest.

If you don't have the time to search, try contacting a software consultant with industry knowledge for suggestions. If you would like to discuss your businesses requirements, contact us here.

Preparing for technology costs

Apart from forecasting costs, the manufacturing industry regularly has government funding schemes to help acquire consulting, software and machinery. For example, the UK has a manufacturing growth programme. Starting the process of understanding the funding available to your business will help you prepare for planned expansion and digital transformation.

Software Integration Challenges

Having software can significantly benefit your business, but too many can hinder it.

It can result in:

High combined costs
Several data sources
Poor internal team communication
Unreliable reporting

Solutions to software integration

Single software solution

The dream for many businesses can be tough to accomplish. However, there are now software solutions offering modules that will help every business division succeed and, most importantly, thrive working together.

Zoho One now unifies every aspect of many businesses.

Single analytics solution

If your business cannot use one software, another option is using a business intelligence tool. All your business tools feed data into one reporting software to get a clear, unified view.

There is no shortage of providers catering to all business sizes and budgets.

View a comparison of market leaders here.

Preparing for software integration

Which software can you ditch?

When introducing new software, it's crucial to understand what software you already have. Understand its capabilities, cost and integration API. This way, you know which software will be replaced by the new and how the new software will link up with the existing solutions you must keep.

What is your workflow?

By creating a process flow, you will know what you want the software to do, the order, and the desired outcome.

Is it future proof?

As a crucial part of your business, you need to know the supplier is capable of supplying and supporting for years to come. If it relies on someone internally, do you have records, training manuals and qualified cover?

Final thoughts

We've detailed six challenges we commonly see manufacturers face and help overcome. For steady and planned growth, it's not enough to overcome a challenge, you must prepare for them to return. We've detailed some of the preparations that owners and managers of manufacturing businesses can do to be ahead of competitors, as an industry or sector often simultaneously face most challenges together as a result of external economical factors.

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