How Manufacturing Best Practices Can Increase Your Profit! (Part 2)
In our last post entitled, “Why It’s Vital To Get Your Manufacturing Best Practices Right The First Time Round!” we talked about the importance of instigating best practices as an exercise in defining what efficiency and “acceptable” levels of output look like in your factory. One of the most powerful aspects of setting best practices is that it gives you the ability to check yourself and see if you are meeting your best expectations. The idea being that you can’t fix what you have not measured. Striving for excellence is one reason to follow best practices but for most manufacturers and businesses, the underlying, motivation will always be to boost profit.
Following on from our last article, let’s examine how following the best practices mentioned there can lead to greater profits:
In our last article, we spoke about how new technologies entering the market as part of industry 4.0 will help factories get a better handle on what is actually happening in their factory. Today, it is relatively simple to track anything from how much each machine outputs to how productive staff are, provided you harness the right technologies.
In practice, factories are using these metrics to drive profit-boosting changes. Our first ebook, “Inefficient No More” discussed the 6 factors that most commonly result in factory inefficiencies including both human and machine inefficiencies. Following extensive research, we identified the following as being the most pervasive problems factories face:
- Silos – Workers functioning in silos and not communicating with the wider group
- Lack of Understanding – Workers not understanding how their role fits in with the bigger picture and therefore acting against the greater good of the company
- Fear – Fear of getting in trouble preventing workers from reporting problems, errors, dangers or machinery malfunction.
- Bottlenecks – Bottlenecks in production lines caused by inefficient planning
- Hidden inefficiencies – Hidden inefficiencies resulting from inadequate tracking of what’s going on – “you can’t fix what you don’t know”
- Lack of real-time data -Lack of real-time data meaning that problems and inefficiencies are not discovered at the time they happen but often hours or days later where they have already caused a lot of disruption to production.
Waste costs manufacturers millions of dollars each year. Waste doesn’t just refer to wasted resources but can include:
waste of time,
- Producing too much of a certain product and being unable to sell it,
- What is done with defective merchandise,
- How are you using your skilled workers
- How are you planning transportation and logistics?
A serious examination of how all these issues are handled in your factory followed by the planning and definition of best practices will both save you money and very likely, increase your profit margins.
Broken machines are a massive drain on profits. It is generally far cheaper to maintain machines than to fix them when they go down. Companies that have maintenance best practices in place and implement a maintenance schedule will have less instances of profit-draining downtime.
Inefficient supply-chains are a huge drain on profits. Best practices for supply-chain planning includes monitoring of raw materials and finished products, as well as scheduled deliveries. New software such as those introduced in the industry 4.0 wave of modernization can assist greatly in stock management which can be automated into your factory process for even greater efficiency and profit.
What’s the takeaway?
It sounds very simple to say that factories must plan things better and measure their progress in order to reap the rewards of higher profits and yes, it is simple. The reality, however, is that every factory incorporates many “cogs” that make up the overall “machine.” It can be very hard to maintain a level of control over everything. Just overlooking one, seemingly small, aspect of production planning can cause huge inefficiencies and loss of income. Fortunately, we live in an age of technology, where so much can be automated and planning and goal-setting is that much easier. While best practices sound like another headache and more paperwork for factory management, they are actually a very trusted way of making sure you are meeting your own targets and not allowing insidious profit-leaks to get out of hand.