Let’s talk about the most significant issues that manufacturers and their supply chains are seeing in today’s environment. After covering the issues facing manufacturing companies, we will present some potential solutions that can be applied to work through the issues. We’ve narrowed down the major issues manufacturers are facing to three high-level areas: shipment unpredictability, long supply chain, and increased cost.
Major Manufacturing Issues
Shipment & Delivery Unpredictability
The first issue we are seeing is the supplier’s inability to communicate shipment details. This can include when a product is going to arrive, when a raw material or finished goods are going to arrive, how a shipment will arrive, what truck it’s going to arrive on or what type of vehicle it will arrive on. A lack of communication is an overarching issue facing manufacturers.
Long Supply Chain & Increased Lead Times
The second issue we are seeing is a long supply chain. Manufacturers have extended supply chains to reduce costs and offshored a lot of their supply chains. The inability to bring products in has caused the supply chain to get longer alongside ever-increasing lead times.
Increased Cost Across the Board
The third issue we are seeing is increased costs of many aspects of the manufacturing process. The problem of increased costs is fairly obvious – increased costs lead to decreased profits. Unpredictable and increasing operational costs can put a manufacturing company at risk of unsustainability.
Critical Underlying Problem: Lack of Communication in Manufacturing
Here at Work Excellence, we have been helping manufacturing companies by coaching them through the manufacturing issues explained above. We are more than happy to share the successful solutions we have found. Before we provide solutions, a ubiquitous issue that needs to be deconstructed and addressed is the lack of communication.
A manufacturing company faces serious frustration and friction if they cannot tell their customer when they should expect to receive their product because they don’t know when they will receive the needed component from their supplier. It is important to understand that lack of communication can extend the entire supply chain and lies at the heart of many problems manufacturing companies face.
Tested Solutions to Major Manufacturing Issues
Over-communicate with Your Customers
You must give the best service, the best product that is the best quality at the right time to your customer. The ability to meet customer expectations largely relies on your supply chain and labor. We highly suggest you over-communicate with your customers. You must over-communicate your situation to your customers while taking their perspective into account.
Over-communicate with Your Suppliers
What we have been coaching manufacturing companies to do is be the squeaky wheel with their suppliers. Get to your suppliers first – get on their hot list or their super secret top priority list and make sure that they understand that you are an important customer.
Be A Dedicated Partner to Your Suppliers
It would be best if you make your manufacturing company important to your suppliers. Be a great partner to that supplier and continue to order products from them. As long as they see you as a partner – they see you as somebody they want to continue to do business with. Your suppliers are prioritizing their best customers just as you should be during economically challenging times.
Deeply Understand Your Entire Supply Chain
You need to know what is going on in each aspect of your supply chain. To properly communicate your situation, you must have a deep understanding of how each link in your supply chain functions and any issues each supply chain link is facing.
Due to the COVID Crisis, many countries experience a lack of production interconnected to the lack of production in the United States. This supply chain interruption has exacerbated any issues a manufacturing company was already experiencing. You can read more about supply chain disruption due to the COVID pandemic here.
Control Your Costs
Almost all manufacturing companies have witnessed an increase in labor costs due to the COVID pandemic. It is important to assess your situation when it comes to increasing labor costs and look for any opportunities to reduce labor costs. Additional costs to take a hard look at are: logistics costs and warehousing costs.
Shorten Your Supply Chain
Shortening your supply chain can reduce shipping costs and time. Finding new suppliers that are closer to your manufacturing location helps mitigate the supply chain challenges manufacturers are experiencing. Many manufacturing companies that had been buying raw materials from China or other locations that require ocean freight are now purchasing raw materials from US-based suppliers or nearshore suppliers such as Mexico.
After examining the total cost of raw materials, the cost may be less or close to equal with the added benefit of reducing shipment and delivery unpredictability. Additionally, US suppliers and “near-shore” suppliers have a more reliable transportation network.
We Specialize in Helping Manufacturing Companies
The suggestions for dealing with manufacturing challenges discussed in this article can be difficult to implement. If your company has been negatively impacted by the COVID pandemic or you need to overcome manufacturing challenges, we will work with you to come up with customized solutions.
Just give us a call – we’re here, we’re willing to help, and we’re willing to share ideas of how we’ve helped other organizations. We truly believe that using the Work Excellence Method will help you solve issues for your manufacturing company.