7 Common Manufacturing Challenges & How to Overcome Them

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7 Common Manufacturing Challenges & How to Overcome Them

The manufacturing industry is expected to continue to grow in the next few years, despite all the challenges. Apart from the instability in both national and international economic conditions, there are also various internal challenges faced by manufacturers. Here are seven common challenges in the manufacturing industry along with the solutions to overcome them.

1. Forecasting Demand for Products

Today, there are still many manufacturers who have difficulty forecasting future demand. The main problem is that they do not have advanced reporting tools that allow them to estimate how many items they should sell in the next few months or the following year. As a result, their products fail to meet the customer demand and they suffer lower sales.

The solutions:

In order to be able to forecast customer demand the right way, manufacturers should use accurate reporting tools that can make it easier for them to target sales and estimate how many and which items they should produce in the future.

HashMicro’s Sales Management System can help manufacturers analyze consumer behavior; which products they are interested in, when they usually make purchases, how many products they buy at certain times, and etc. While HashMicro’s Inventory Management System can help them identify their fast-moving and slow-moving products.

In addition to utilizing software to make accurate forecasts, manufacturers also need to consider external events such as currency exchange rates, rising fuel prices, current market trends, and so on. Make sure the sales and marketing teams are always up-to-date on these matters.

2. Controlling Inventory

Inventory management is still one of the main challenges in the manufacturing industry, but thanks to the help of automated solutions, it has become much simpler. Nevertheless there are still many manufacturers, especially the small ones, who still manage their inventory manually.

Inventory tracking is a time-consuming process that can be streamlined with the help of software. Checking stock manually is very inefficient and prone to errors that can lead to inaccuracies, shortages and overstock, as well as unidentified damages.

The solutions:

To avoid unnecessary purchases of raw materials and equipment that lead to customer dissatisfaction, good inventory management strategies are highly needed. Routine inventory audits need to be carried out (both physical and cycle counts) to identify discrepancies between the numbers recorded in the company’s books and the actual number of items on hand. Barcode scanners can be used to speed up the tracking process.

Inventory managers need to ensure all the raw materials are sufficient for production and all the finished goods are ready to be delivered to end users. This can be done very easily using inventory management software. It allows inventory managers to keep up with inventory levels at all times, receive alerts when inventory approaches the specified minimum amount, and reorder the right items at the right time.

Good inventory management software can also be integrated with barcode scanners to speed up the inventory tracking process and also with other software systems such as purchasing and accounting systems. Small-scale manufacturing businesses do not need to worry about having trouble investing in this software, since there are affordable cloud solutions for them.

3. Improving Efficiency at Manufacturing Plants

Up until now, manufacturers have been looking for effective ways to reduce costs and improve efficiency at their plants. Many of them choose to sacrifice the quality of their products to reduce their production costs, but this will only reduce their profitability, because dissatisfied customers will stop buying from them.

The solutions:

One of the most effective ways to optimize efficiency at manufacturing plants is to modernize the processes and systematize the workflows. Manufacturers need to minimize time-consuming and labor-intensive tasks, reduce material waste, optimize the use of equipment by minimizing damage, and simplify their supply chains. Enterprise Resource Planning (ERP) systems can facilitate all of them, thus enabling manufacturers to achieve optimal efficiency.

Read the related article: 7 Ways to Improve Efficiency at Your Manufacturing Plant

4. Increasing ROI

Any manufacturer would want to be able to increase their ROI. They would usually increase their sales or the price of their products. However, these aren’t effective ways, especially when economic conditions are being erratic, reducing consumer purchasing power.

The solutions:

There are several ways to increase ROI such as:

1. Increase sales the right way

First, manufacturers should be able to clearly define their returns, since they can include higher sales, increased revenue, greater profits, reduced overhead or production costs, higher employee retention, and better customer satisfaction. Then, they need to set multiple benchmarks for their return goals. For example, instead of setting increased sales as a goal, they can increase sales during certain months in particular territories.

2. Update marketing strategies

Manufacturers can also change their marketing strategies by utilizing digital marketing, because the costs are cheaper than conventional methods (including placing advertisements on TV, newspapers, or billboards). This can be done by optimizing their website content, posting advertisements through search engines and social media, and personalizing email marketing campaigns.

3. Reduce costs

Manufacturers can reduce production costs by changing the design or packaging materials without having to sacrifice the quality of their products and negotiate with suppliers to get discounted prices.

With the help of ERP software, manufacturers can not only reduce production costs, but also save labor costs, control the cost of procurement, and allocate costs appropriately.

5. Skilled Labor Shortage

Although automation and robotics can help fill the labor gap, human capabilities will still be needed to analyze and solve problems as well as manage outputs. With the baby boomer generation entering retirement, the manufacturing industry is facing a looming labor shortage. This is one of the biggest threats facing the manufacturing sector today.

The solutions:

To overcome the shortage of qualified workforce, manufacturers must be creative in recruiting employees by relying on various online platforms to post job openings. Producers must be truly selective when choosing prospective employees and ensure that they are able to work quickly, on target, under pressure, and do not object to shift work schedules.

In addition, manufacturers must be able to provide their new and existing employees with regular training to help increase their potential. Manufacturers need to consider using competency management software to bridge their workforce skill gaps.

6. Managing Sales Leads

Another challenge often faced by manufacturers is managing and prioritizing sales leads. Many of them treat their leads in the same way, but this isn’t the right method. Every sales lead must be treated specifically since they have different characters, preferences, and needs.

Manufacturers also often find it difficult to identify potential leads so they often focus on unpromising opportunities and forget to follow up with high potential leads.

The solutions:

Manufacturers must truly understand their sales leads. This can be done by digging deeper into their information. Manufacturers must have a system that makes it easy for them to keep, manage, and track prospect information.

The CRM system can help manufacturers understand their sales leads better through a centralized customer database, making it easier for them to identify qualified prospects so they can focus on the best opportunities, know the status of sales leads in real time without having to ask the sales team, and distribute leads to the right salespeople.

7. Coping with New Technological Advances

Every year, there are always new technologies on horizon, which include the IoT, robotics, and manufacturing software. The emergence of these advanced technologies certainly gets manufacturers overwhelmed; Which ones do I should invest in? Will implementing this technology be a good decision for my manufacturing business?

The solutions:

Avoiding technology is certainly not a good move, because manufacturers do have to be able to adapt to any changes, including technology, to be able to stay ahead in the highly competitive market. However, manufacturers should not be careless when deciding to implement automated solutions.

The best way that manufacturers can do is to discuss with all stakeholders and involve their employees to figure out the difficulties they face on a daily basis. Manufacturers also need to consider the company’s budget to determine whether they are ready to invest in the desired technology, be it software like ERP or hardware like robotics.

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