Any manufacturing business that isn’t profitable wouldn’t exist, so if you are reading this, chances are that you are already seeing a decent enough profit. However, it could also mean that your profits have shrunk over the last few quarters or maybe, it has remained more or less the same for years now. Neither one of the scenarios is desirable or bodes well for any company since a business that stops growing or begins to shrink is dying.
Read on as we discuss a number of ways in which it is possible to increase profits in any manufacturing business, as long as the decision makers are ready to take the necessary actions.
Understand Lean Management by Taking an Online Course
A lot of the steps we are going to discuss has a basis somewhere in lean manufacturing and management techniques, so the very first advice would be that anyone who seeks to improve the production capacity and profit margins of their manufacturing business should complete a lean manufacturing online course.
If you are running your own business, it would not be practical to suggest that you should go back to school and get a full-time degree, which isn’t really necessary either. The lean manufacturing online course offered by the Kettering University has been developed in cooperation with General Motors, with a strong basis on the Six Sigma Lean Management methods. Post-graduation, students will have the intricate knowledge necessary to improvise and increase profits in ways that they simply could not have before.
Improving the Turnaround Time
In business, time is money, and unless you are up to speed, you are losing money. In other words, you need to improve your turnaround time to see an immediate improvement in both productivity and profits. In order to do that, you will need to go back to the drawing board and check every step that exists from order to delivery. The goal would be to figure out where you can speed up things. Go through the following few ideas and see if any of them can be implemented to improve your company’s overall turnaround time.
Eliminating Steps and Repetitive Tasks with Automation
If you are not yet using automation technology to eliminate repetitive tasks and unnecessary steps in your manufacturing process, you have to change that as soon as possible. Modern automation software, empowered with robotics and machine learning can essentially eliminate enough steps to improve your turnaround time tremendously.
Even if it is a small operation that you run, try making small initial investments into automation and you will be surprised by the amount of time you end up saving, alongside the huge increase in production capacity.
Rerouting Delivery Routes
Your delivery trucks could be losing a lot of time and costing you money because they are taking poor routes. Take a look at your current delivery routes and sit with your drivers to see if you cannot figure out better routes to at least some of your delivery stations. As a matter of fact, it might also be wise to see if some of the unnecessary stops cannot be eliminated altogether.
Automation can once again come in extremely handy, as modern GPS systems with their satellite tracking can dynamically change the delivery routes of your trucks, in accordance with live road and traffic conditions. That is one of the many reasons why Uber has a dedicated GPS system onboard every one of their cars.
Bringing Everything Closer Together
This would be easier to understand and implement once you complete a lean manufacturing online course, but the general idea is to bring everything you control closer to each other within a manufacturing plant so that unnecessary wastage of time can be eliminated from the turnaround time.
This applies everywhere, such as the number of steps a factory worker needs to take in order to get from point A to point B. The closer and more compact a factory are, the more time it will save on every cycle. Even if you manage to shave off a few minutes on every manufacturing cycle, imagine the kind of productivity you will be gaining at the end of the year by adding up all those extra minutes.
A core principle of lean manufacturing is to eliminate waste of any kind, which is crucial to seeing better profits from your business. Once again, consider the following and see if you cannot reduce the wastage of resources from your own manufacturing process.
Estimating Market Demand
Are you producing more than you need to? If that’s indeed the situation, then you are unable to properly estimate the market demand.
To improve estimation initially, only produce what has been ordered and nothing more. Reduce wastage by not going overboard with the production, even if you have the capacity to fill bigger orders. Let the orders first come in, and only then start with the manufacturing to meet those demands.
On the other hand, if you are unable to meet your demands, that indicates poor turnaround time, about which we have already discussed. If you simply can’t handle bigger orders at the moment, don’t take them and explain why you can’t to your clients. It’s better to have a reputation as a small but honest supplier, rather than being reputed as a manufacturing unit that takes up orders which they are incapable of supplying in time. Reputation is everything in business and if you are unable to meet deadlines, you are wasting your clients’ time as well.
As a final tip, see if you are not doing too much and over-refining things. Every minute of time spent in refining your products is costing you money, so unless the demand specifically requires that kind of refinement, only do what you are required to do, which in turn, will significantly improve your own profit margins. There is no point in delivering a product worth $150, if you are expected to deliver a product worth $120, because believe it or not, the extra $30 is coming out of your profit margin!