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Business Trends

Improving the Manufacturing Process

An economic slowdown is never a good time for a manufacturer. The problem with an economic slowdown is that no one can predict when it will happen. However, some signs can indicate when it is going to happen and when these signs start to appear, the time comes to be proactive.

Many US economists and industry specialists believe that a slowdown is on the cards and that a recession is brewing in international markets. Although things might seem sturdy and stable, a global event like the COVID-19 pandemic can be a catalyst for a slowdown.

Reading the signs

Although there is no way of knowing exactly when a slowdown will hit, there are some signs that can indicate when one is impending. When the customers’ industries are experiencing hard times, their buying power starts to decrease.

Also, when a company’s orders and backlogs start to decrease on a monthly or even yearly basis, something is amiss. As a manufacturing company, a healthy stockpile is not a bad thing, but when the inventory keeps increasing and there is a decrease in inventory sales, it also points towards a possible slowdown.

Lastly, one of the main areas of concern or where to look for signs is when the overall operating margins start to decrease.

What should the manufacturer do?

According to Peter Peterka, a lean six sigma specialist for Global Six sigma, companies wait too long to take action. Only when there has been a decrease for a couple of months do they start to take action, but then the damage has already been done.

He mentions that manufacturers should continually dig deep into industry data and speak to others who are in the same industry before the decline goes on for too long. When the first sign appears, they should take proactive action and brace for the storm before it hits.

What these plans look like

Companies who withstand a slowdown typically invest in improving the quality of the balance sheets. This means that they reduce the spending on non-essentials and accelerate collections on accounts receivable.

Inventory also plays a big role, which is why they start to reduce their on-hand inventory and closely monitor and evaluate the numbers. This will then also have an influence o the raw materials in inventory. As these numbers begin to decline, they also look at their staffing contingency and determine their workforce needs during a slowdown.

Training employees

Employees can often get stuck in their ways and this is not necessarily their fault. When a slowdown occurs, investing in the training of employees should be a key priority. The main reason for this is because things will not continue to be slow forever and when business picks up again, manufacturing should also run perfectly.

The skills of employees should always be improved and an accurate record of their training should be kept. This will ensure that production will be constant and the quality will be constant.

Updated technology and processes

There are upsides to a slowdown in terms of the manufacturing process and technology. During a slowdown, a company is forced to evaluate whether their processes are running at optimum rates and whether they are still competing in terms of technology.

When a company is running at full tilt, there is little time for innovation and change processes. This is the time when automation can be investigated.

New software solutions and monitoring products are also continually updated and should be scrutinized during a slowdown. Every facet of the production process should be evaluated to determine whether it is running at optimal levels.

 

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