How do I lower manufacturing costs?

man working in manufacturing facility

(Courtesy of Guest Blogger Liz Fox, senior marketing associate, MAGNET: The Manufacturing Growth Advocacy Network)

As manufacturing shifts and grows through technological innovation and higher demand, shops are continually becoming more flexible and embracing the idea of slimming down. As a result, manufacturers are looking for ways to save money without sacrificing valuable manpower, processes, or components. If your efforts aren’t producing ideal profit margins, the following are some valuable cost-reduction ideas that should be considered in your long-term plans.

Assess and enhance your processes.

Before taking the next step toward cutting costs, you need to assess your manufacturing processes by looking at them from every angle. What details do you notice? Are there unnecessary steps or equipment? When you look at the big picture, it not only tells you where things can be improved, but gives you guidance on how to innovative so that materials aren’t wasted, labor isn’t costly, and scrap is minimal.

This can involve the following:

  • Implement additive techniques to reduce development time and use less expensive materials
  • Make better use of suppliers by evaluating and prioritizing your current needs
  • Modify designs to make them more cost-effective
  • Adopt Lean manufacturing and create a culture of continuous improvement

Go green.

Companies now are more receptive to sustainability as a key pillar of their day-to-day operations, and this means cutting back on energy consumption. With the right blend of technology, real-time data, and other resources, companies can run slower without disposing of good customer service or creating longer lead times. Take initiative by installing energy-efficient lighting fixtures, rescheduling the use of high-powered equipment, and putting together a special team to ensure all energy-oriented manufacturing costs are being managed appropriately.

Consider the cost of inventory.

Inventory space utilized for a long period of time can lead to high costs for storage, maintenance, and insurance. Take measures to make your operations more fluid, responsive, and oriented toward noted actual demand, which can help you avoid overproduction, cut the amount of waste, and substantially reduce cash spent on space for additional product inventory.

For more information, contact MAGNET at 216.391.7002 or visit manufacturingsuccess.org.

MAGNET’s 2016 State of Manufacturing address took place at Jergens, Inc.

MAGNET state of manufacturing symposium at Jergens

On Nov. 16, 2016, MAGNET: The Manufacturing Advocacy and Growth Network, in conjunction with PNC Bank, presented its 2016 State of Manufacturing: Important Trends Affecting Northeast Ohio Manufacturers at Jergens Inc., 15700 S. Waterloo Road, Cleveland. There was standing room only as manufacturers and service-industry representatives arrived to hear presentations by Rich Wetzel, Youngstown Business Incubator, on the state of additive manufacturing and Dr. Ned Hill, The Ohio State University’s John Glenn College of Public Affairs and Ohio Manufacturing Institute, on manufacturing, the economy and the future.

In opening remarks, Paul Clark, regional president, PNC Bank, noted that “Thirty percent of PNC’s loan commitments in Northeast Ohio have been in manufacturing for the past 20 of 40 years.” These loans help manufacturers with new product development, new markets and acquisitions.

Wetzel, in his presentation on additive manufacturing, aka 3D printing, shared the seven main processes of additive manufacturing, with material extrusion being the most common, and says, “Northeast Ohio is becoming the capital of additive manufacturing and putting the area on the map.” He also shared that low-volume tooling is the low-hanging fruit and the easiest to implement for near-term opportunities but that the market tends to be risk averse.

Last, Dr. Hill (if I had an economics professor like this in college, I might have liked economics and learned something) talked about the current uncertainty in the market due to the election but the positive increase in interest rates. He says, “Manufacturing is looked at nostalgically by the public since it’s gone overseas, and they believe we aren’t making things.” In 2014, although China was the top nation for manufacturing, the U.S. was a close second. He shared that the largest market opportunity in the world lies in the NAFTA nations. He did a retrospective and shared that manufacturers were always in the top 10 employers in Ohio but now the reality is that part-time, low-wage jobs in healthcare, retail and food service have become the mainstay. In that reality, he says, “Midsized companies will be driving this state.”

Another trend he discussed in depth was automation. Since 1979, we lost almost 5-million factory jobs but at the same time more than doubled the value due to productivity. In addition, he shared statistics that we have lost 13 percent of factory jobs to trade and 88 percent to automation and continuous improvement, and that robotics is expected to reduce labor by another 22 percent in the U.S. He asked the audience to consider how many jobs technology has saved rather than lost. The U.S., for the first time in recent years, is a threat to China due to its quality, efficiency and improved internal supply chain. He says that when manufacturing can 3D print a die, it will save 20-30 percent and can compete with China. And, as much as we would like to believe that manufacturing powers the economy, it’s actually powered by consumers who do 70 percent of the spending. They are buying the products we manufacture!

Finally, he acknowledged the present problem of aging-out workers and the lack of a skilled workforce to replace them. He says manufacturing’s greatest enemies are parents, school counselors and OSHA, which limits workers under 20 from being on the manufacturing floor. We are losing talent to other industries. Let’s make these people our allies and work toward STEM education and a resurgence of interest in a field has evolved and shed its former stereotypical image.

 

6 reasons why you need digital marketing to expand your business

woman touching digital screen

(Courtesy of Guest Blogger Liz Fox, senior marketing associate, MAGNET: The Manufacturing Advocacy and Growth Network)

Manufacturing has always been at the forefront of change and innovation, notably in creating and implementing new measures to better serve the needs of the company and its customer base. But the rapid pace of technological growth – paired with reluctance to invest in new and/or unexplored systems – has left small- and mid-sized businesses struggling to keep up in an increasingly connected world.

However, digital marketing services can be utilized for different purposes in different industries with the ultimate goal of increasing revenue and establishing credibility. The following reasons not only address the numerous benefits of incorporating digital marketing in your overall strategy, but also how different techniques can grow your business sooner rather than later.

  • Lead delivery and conversion – Lead scoring empowers companies to better track how customers are finding them. By using a marketing automation platform in conjunction with customer relationship management (CRM) software, manufacturers easily can monitor how incoming traffic gets converted to leads, followers, subscribers, and/or closed sales.
  • Reduced marketing costs – Traditional media, such as print, radio, and television, harbor high rates and are, in some cases, ineffective at getting to your target market. Digital marketing not only touches a wider range of clients, but also bears better returns on investment. In fact, according to Gartner’s Digital Marketing Spend Report, 40 percent of surveyed small- and mid-sized companies claimed they saved money by using digital means of promotion.
  • Level playing field – Now that digital marketing services are becoming more cost-effective, they are no longer exclusive to large, multinational corporations. Smaller companies are granted access to services and capabilities that can help them better compete in growing industries. Sales and marketing strategies as a whole also are subject to expansion, which enables manufacturers to compete on similar levels.
  • Better customer interaction –In today’s world, consumers are more likely to follow or purchase from companies with a personal touch, and aspects of digital marketing allow small manufacturers to reach out to their customer base with new products and updates on the company. In particular, branching out into social media – especially Twitter, Facebook, and LinkedIn – builds trust and credibility, which leads to substantial increases in sales and revenue.
  • Enhanced identity and brand reputation – In addition to customer interaction, active social media accounts and a comprehensive website offer brand enforcement not found in traditional media. People are more likely to trust companies that have clear messaging and a substantial digital presence, as interactive elements, such as forms, buttons and feeds, can generate excellent results.
  • IoT integration – Over the last decade, the Internet of Things has grown into a hot topic for manufacturers, and many companies are embracing the ideology of interconnected devices on the shop floor. Digital marketing can act as the first step to preparing you for this shift and, eventually, will play a larger role in how you streamline your business.

Manufacturing undergoes renaissance and evolves its image

MAGNET [M]Power Manufacturing Assembly

On Wednesday, Oct. 19, Manufacturing Advocacy & Growth Network (MAGNET), Cleveland Engineering Society and Crains Cleveland Business hosted its third-annual [M]Power Manufacturing Assembly at the John S. Knight Center, Akron, Ohio.

The event was showcased information, stories and demonstrations that spoke to the renaissance in manufacturing, globally and in Northeast Ohio. Some of the highlights included:

  • A breakfast keynote address by John E. Skory, president, The Illuminating Company
  • A lunch keynote address by Tim Timken, Chairman, CEO & President, TimkenSteel
  • Three breakout sessions that included a choice of area manufacturing speakers and panels who covered topics such as sales and marketing best practices, turnover, innovation, Lean, risk, rapid prototyping, safety, patents, STEM programs, Internet of Things and counterfeiting
  • An exhibitor hall with representatives from education, industry, construction and engineering, agencies, and technology

According to Ethan Karp, president, MAGNET, in his opening remarks, “Ohio ranks second in the nation for new manufacturing jobs created, and small manufacturing powers 40 percent of Northeast Ohio’s revenue.”

During Skory’s keynote speech, he says, “Ohio is third only to Texas and California in the amount of electricity consumed by industry. We are working to support advanced manufacturing and industry by constantly improving systems.”

Then, I attended the morning breakout entitled “Best practices in sales and marketing: identifying and capturing your customer” presented by Dave Winar, CEO, Winar; Dan Yemma, general manager, M7 Technologies; and Craig Coffey, U.S. marketing communications manager, Lincoln Electric. Winar says his company’s motto is, “Common sense, with humor, we will succeed.” That sounds like a great philosophy to live by! He also shared the “salesman ship” graphic that hangs over his desk and says, “The biggest room in the world is the room for improvement.” Coffey focused on the fact that the way people find information now is different from how they did 10 years ago; so, manufacturers need to evolve the way they approach sales as the closer, not the opener and salespeople as deal makers instead of relationship brokers. He also spoke to the importance of a digital footprint and partnering with digital influencers.

In the lunch keynote, Timken quoted a statistic from the National Association of Manufacturers, “For every $1 spent in manufacturing, $1.81 is added to our economy” and that for every worker hired four more jobs are created. You could see his passion for manufacturing when he stated that, for him, manufacturing is “the excitement of making stuff” and the ripple effect of the interconnectedness of people who make things in the region.

In my second breakout session, “Don’t just teach – inspire students: making learning relevant,” Toni Neary, partnership architect, Edge Factor, showed a number of inspiring and, sometimes, chilling videos that illustrate the art of storytelling to connect with youth who “think the world is purchased, not made.” She says that her company partners with manufacturers to show them that “this isn’t your grandfather’s manufacturing facility. It’s not dark, dirty or dangerous.”