Posted by Luc Belaiche on April 16th, 2013
In the UK there seems to be a false consensus over the state of the manufacturing industry. The dominant social narrative would have us believe that manufacturing is either dying or already dead, that we are now a nation of service providers. But to paraphrase Mark Twain: “News of the death of manufacturing has been greatly exaggerated.’
In fact, while manufacturing has declined in relative terms, in real terms it is still a growing industry. According to a 2009 UK manufacturing report by PriceWaterhouseCooper (PwC), British manufacturing reached it’s all-time peak in 2007 but even today it still holds a top worldwide manufacturing status for niche industries such as aerospace and precision engineering.
However, it would be naïve to think that the UK’s manufacturing sector isn’t facing some difficult challenges. Here are three of the top challenges faced by the manufacturing industry and how they could be solved, at least in part, with the implementation of a tailored and integrated MRP solution…
Challenge 1: Access to materials
Whilst not a unique challenge to UK industries, the UK trade deficit together with our growing isolation & weak currency within Europe and dependence on supply from the Far East makes sourcing materials on time and within budget particularly challenging.
Importing raw materials extends the lead-in time for orders, meaning any slight fluctuation or difficulty arising in your usual source country could set back your manufacturing days, if not weeks. Any manufacturer, for example, importing material from Asia in the last decade may well have been severely affected by natural disasters like the devastating tsunami and floods or by increasing labour costs in the rapidly emerging nations such as India and China. A new supplier is difficult to establish quickly, leading to delays and additional costs – eating into the manufacturers already tight profit margin.
How might a tailored MRP solution help overcome this challenge?
With an MRP solution tailored to your specific business you always have an up to date executive overview of your supply and demand, allowing you to ensure peak production continues with material and component supply available on time. When problems arise with your supply, an integrated MRP solution will be invaluable in highlighting the issue in advance enabling you to take corrective action in time.
As part of integrated business software solution there is increased visibility and tracking of supplier consignments, including fully loaded costs, wherever they are sourced in the world.
>>> Choose the right MRP solution for your business with our free MRP software guide <<<
Challenge 2: Managing costs
There are a number of reasons that costs for manufacturers have been creeping up in the last decade or so: a lack of skilled labour, the increasing cost of imports and the inflation of property values to name just a few. Keeping control of these costs has been particularly challenging for the manufacturing industry, where competition with developing countries means even tighter margins.
Ensuring profitability is, of course, essential to the survival of manufacturing – but it remains a very fine balance for business owners and operational managers to find.
How might an MRP solution help overcome this challenge?
An MRP solution specifically tailored to your manufacturing organisation will allow operations managers and planners to identify inefficiencies and poor performance within the supply chain. This will help improve supplier fulfilment levels, production throughput and ultimately customer service levels..
By analysing costs, volumes and performance through the system, the planner or buyer can leverage best price and performance from suppliers including the companies own production facilities!
With these finely tuned levers, business owners, planners and operating managers can keep a better hold of the entire manufacturing process, help create even greater efficiencies and minimise financial shocks and costs in order to ensure profitability for the future.
Challenge 3: Dealing with the supply chain as a whole
There are a number of reasons the manufacturing industry is drowning in their own data – a greater distribution of suppliers and customers, multiple manufacturing bases, greater levels of subcontracting and complex distribution networks, to name but a few. The more departments and businesses communicate across multiple geographic locations, time zones and systems, the more data there is and the greater the chance of errors and delays.
An operations manager or planner will be expected to collate this data into a single meaningful stream in order to analyse and use it for material and distribution planning. A single error in this process could leave you overstocked, tying up significant amounts of cash, or under stocked and having to deal with irate customers and order cancellations.
How might a software solution help overcome this challenge?
A business software solution that has been tailored to your business will allow for quick and easy data flow between departments, manufacturing bases, suppliers, distributors and subcontractors. This integrated system provides operations managers and planners with a clear overview of all the data essential to a smooth manufacturing process and helps to avoid overstocking, late deliveries or missed orders.
The supply suggestions output from the MRP system, once confirmed, can be updated immediately in the system and so visible to all in the business. Where appropriate the changes are sent electronically over the Internet to suppliers, subcontractors and customers linking your supply chain tightly together.
>>> Choose the right MRP solution for your business with our free MRP guide <<<
As a manufacturing industry professional, what do you consider the greatest challenges in the current global market? Do you see the sector “bouncing-back’ in the near-term?
We’d love to hear your thoughts in the comments section below…