Despite all the challenges, the manufacturing industry is set to continue growing in the coming years. In addition to the instability of domestic and international economic conditions, there are also a number of internal challenges facing manufacturers. Here are the 7 biggest manufacturers’ headaches… and how to solve them.

Headache 1: Forecasting Product Demand

There are still many manufacturers today who struggle to forecast future demand. The main problem is that they don’t have advanced reporting tools to estimate how many items they should sell over the next period, be it a few months or over the next year. As a result, their products fail to meet customer demand and suffer from lower sales.

How to solve it:

In order to properly forecast customer demand, manufacturers need to use reporting tools that make it easier for them to target sales and estimate how many and which items they should produce in the future. Modern ERP systems like the Microsoft Dynamics 365 Business Central can help manufacturers quickly piece together their consumer behavior story; which products are hot in demand, what consumer shopping patterns are, when and where, possibly even why they shop, or how aggressively they buy, etc.

A good Inventory Management System can help them identify their fastmoving or otherwise 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 current on these matters.

Headache 2: Controlling Inventory

Inventory management is still one of the prevalent challenges in the manufacturing industry, but with the help of automated solutions, it can 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.

How to solve it:

To avoid unnecessary purchases of raw materials and equipment that lead to customer dissatisfaction, good inventory management strategies are highly needed.

Routine inventory checks are necessary 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 must ensure that all raw materials are sufficient for production and that all finished goods are ready to be shipped to end users.

Ideally, look for a system that notifies you when stock levels approach specified minimums and reorders the right items at the right time. Better inventory management software can also integrate with barcode scanners to speed up the inventory tracking process, and also with other software systems such as accounting and purchasing systems.

With a proper inventory management system, you’ll have won half the battle in ensuring good inventory management strategies. Even for the smaller manufacturers, now there are many available cloud solutions such as the Microsoft Dynamics 365 Business Central that pack a punch in an SMB-friendly price tag.

Headache 3: Increasing efficiency in manufacturing plants

Traditionally, manufacturers have looked for effective ways to reduce costs and improve efficiency in their plants. Many of them choose to sacrifice the quality of their products to lower their production costs, but this will only reduce their profitability as dissatisfied customers stop buying from them.

How to solve it:

One of the most effective ways to optimize efficiency in manufacturing plants is to modernize processes and systematize workflows. Manufacturers need to minimize time-consuming and labor-intensive tasks, reduce material waste, optimize equipment utilization while minimizing damage and simplifying their supply chains. ERP systems like Microsoft Dynamics 365 Business Central can facilitate them all and allow manufacturers to achieve optimal efficiencies.

Headache 4: Increase ROI

Every manufacturer wants to be able to increase their ROI. The most typical way to do this is to jumpstart an unnatural increase in sales or jack up the price of products. However, these are neither effective nor sustainable, especially when economic conditions are unpredictable and reducing consumer purchasing power.

How to solve it:

1. Have good, data-backed analysis of margins and cashflow positions – This gives a better idea of your own trends that impact better income, accelerated revenue, extra profits, decreased overhead or manufacturing charges, better worker retention, and higher user satisfaction. Then, set specific benchmarks to reach their goals. For example, increasing a particular SKU movement as opposed to just a generic increase in sales.
2. Update advertising and marketing techniques – A little bit more exposure couldn’t hurt anyone, eh? Changing the way we do things is not just confined to internal processes but also how we reach out to the rest of the world. Digital marketing has become a fast growing industry because it’s become a need for every company to get their products out in front of customers, and to survive.
3. Save costs indirectly – Manufacturers typically overlook other areas where costs can be saved. Instead of sacrificing quality in raw materials or cutting corners, a significant margin can be achieve by simply cutting other operating costs. No doubt even with the help of an ERP, manufacturers cannot directly decrease capex expenses. The good news is however, that savings can be materialized from other avenues, such as saved manhours on processing time, cutting down manual labour manpower, savings in proper and efficient procurement of supplies, and accurate allocation of expenses.

Headache 5: Skilled Labor Shortage

With boomers getting into retirement, and millennials often aspiring for less manually-demanding jobs, manpower shortages are fast becoming a very critical threat to the manufacturing sector.

Rising wages and dwindling numbers of skilled workers ultimately lead to higher expenses and costs, offering little respite to the wearing manufacturer.

How to solve it:

To conquer the lack of a skilled workforce, manufacturers could look to creative ways to augment the workforce that they have. Some examples are to invest in automation, or an intuitive and user-friendly business management system that helps workers get more done faster and better.

Headache 6: Managing Sales Leads

Can having too many sales enquiries actually become a problem? Yes – in fact, having more leads come through than you can manage might even be detrimental to your business. Many manufacturers just simply don’t have an effective way to manage their sales leads. What results is unsatisfied customers, lost leads due to slow response and inability to strike when the iron is hot.

Many manufacturers overlook the importance of having proper customer relationship management processes in place to manage sales leads and opportunities. Even if they have a lead management system, the need for personalized customer service is often understated in the manufacturing industry.

How to solve it:

Invest in a CRM system, or an ERP system that has CRM functionalities that come with an Outlook plugin so that you can track leads directly from your email inbox. A good CRM will help you manage each RFI, RFQ or even the sales quotes you’ve already sent out so you know who you can follow up with.

Headache 7: Coping with New Technological Advances

Year-on-year, new fangled technology gets unveiled. In a never-ending rush for technologies such as IoT, AI, RPA and others, manufacturers struggle to stay ahead of the curve. Striding the balance between investment costs and ROI potential, manufacturers often face difficult decisions.

How to solve it:

Avoiding change and innovation is no longer an option. Manufacturers need to adapt in order to thrive in an exceedingly aggressive market. But with the costs of technology, such investment decisions must be taken with great precaution. One way to help minimize the risk of a bad ROI on technological investments is by analyzing existing business data, to ascertain which areas can be improved by leveraging on suitable solutions in the market, any by how much. Quantifying such factors then helps manufacturers make a more informed choice rather than a very expensive gamble.

Need a solution to your manufacturing woes?

For a comprehensive and holistic manufacturing ERP, check out the Microsoft Dynamics 365 Business Central or schedule a callback from our friendly consultants by clicking here.