In what they’re calling “the Trump effect,” manufacturing looks as if it is going to be making a big comeback in the US. Already we’ve seen over 1,000 jobs saved at Carrier air conditioning, boosting the incoming president’s reputation for business prowess. And we’ve heard news from other companies, like Ford and Apple, that they too are looking to expand their operations in the US, or at least, not move to Mexico.
These are significant victories from a political perspective if you’re a US worker. But they’re also a great time to figure out how to capitalize on factory floor efficiency. Despite what the incoming administration might say, American labor is nowhere near as cheap as Chinese labor, and so American manufacturers are going to have to find new ways to drive down costs if they want to keep their operations in the Rust Belt, and elsewhere.
Fortunately, the picture across the manufacturing sector is looking good at the moment in the US. The Institute of Supply Management recently released its manufacturing activity index, which is now up to 59, well above the 50 that is required to indicate that the sector is growing. What’s more, this is much higher than the manufacturing activity index in China, where activity has slumped to close to 50.
So given that the global manufacturing industry seems to be re-centering around the US, what can companies do on the factory floor to make their operations more efficient?
Review Your Client List
One of the biggest problems facing small factory businesses today is bad clients. It’s a good idea, every once in a while, to study your books and list all of your customers in order of profitability. Start with the most profitable clients and work your way down the list to see who is generating money for your business, and who is a drag. It’s worth measuring all of the resources of your company that they consume, including any re-tooling or R&D work, as well as the amount of time your customer service people and sales people have to spend on the phone or in meetings. Often you'll find that around 20 percent of their clients are consuming 80 percent of your resources. Think honestly about whether these companies are profitable to work with. If the returns aren’t high enough, or if they wind up being negative once you’ve factored in the costs of labor, then look for ways to improve the relationship or cancel it.
Evaluate Your Line
When factory owners think about how they are going to improve their operations, the first thing they think about is the production line itself. Even the best factories can sometimes botch orders if something isn’t quite right. It’s a good idea, therefore, to check over the production line and keep tabs on any defective equipment that isn’t working properly. It’s also a good idea to make sure that you have the latest equipment, suited to your needs. Reliant Finishing Systems has details.
Often you can find problems and fix them before they become real issues by using the latest sensor technology. Modern sensors can be retrofitted to older pieces of equipment and then they can provide factory operators with real-time readouts of the state of their production processes. If a machine is near to failing, sensors should be able to give factory owners advance warning, allowing them to schedule maintenance and repair.
Find Out How Much Your Bottlenecks Are Costing You
American manufacturers also need to think carefully where their bottlenecks are and how they should expand their operations. When looking for where to invest capital, always look for the part of your production process that is holding everything else up. For instance, take the Tesla car factory in Fremont, California. The factory used to be able to only output a few thousand cars a year, thanks to the fact that its painting system was slow. Now, though, it has invested in a custom paint shop that can paint the bodywork of a car in a matter of minutes.
You don’t have to spend an enormous amount of money, of course. There are often plenty of cheap workarounds which allow you to deal with bottlenecks efficiently. It could be as simple as not having enough bays at your facility to unload lorries of material. Creating a delivery schedule that runs through the night might be a possibility while you wait for larger premises.
Don’t Interrupt Current Workflow
One of the biggest costs for manufacturers of upgrading their existing equipment is the fact that it so often interrupts workflow. Not only does new equipment cost a lot of money, but it also prevents existing equipment from producing the goods needed to pay for it.
Before starting any work on the factory floor itself, set yourself some realistic goals for improvement. Work out how much it will cost you to get your factory into peak operating condition, and then add on top of that the costs of additional work. Roll out any new equipment or processes in stages so that you don’t interrupt your existing workflow. Then measure the changes to make sure that they have a material effect on your bottom line. Are you able to produce more units per hour? Has the speed of your production line increased? If not, why not?
There are generally two ways in which improvements in efficiency come about. The first is top-down through management. Here, companies need systems to quickly transmit innovation down to the level of the factory floor. That means having good linkages in the company and having the expertise to implement changes.
The second is bottom-up, through employee engagement. Often employees know what’s holding them up and what would enable them to work faster and better. Innovative companies usually have systems to source new ideas from the grassroots, and practical methods to implement them.
Top companies in the US wanting to steal business away from China are consulting with their own employees and leveraging the power of their collective brains. This is putting them at an advantage.