In 2019, manufacturers are facing challenges like compliance, lack of oversight, competitive lead times and increasingly complex supply chains.
This is true for both discrete and process manufacturing businesses.
In a rapidly changing environment, how can you grow your manufacturing business while controlling costs and increasing profitability?
This post will look at how you can reduce your lead times therefore improving profitability and saving resources.
Manufacturing process in Sage X3, click for larger image
Lead Times – Time is Money!
For manufacturers, a number of problems can occur throughout the supply chain:
- There’s the risk of running out of inventory or having to carry more to compensate for unreliable suppliers.
- Speed to market is threatened, meaning your peer competitors might introduce new products quicker and grab more market share.
- Responding to market changes becomes increasingly difficult, and if the items you’ve waited on for so long show up with quality control issues, there’s less time to react.
Extended lead times not only cause annoyance, but can also end up costing your organisation money. By reducing lead times, organisations will often benefit from reduced carrying costs, streamlined operations, and improved productivity. This, in turn, will allow your company to outpace your competitors resulting in greater success in the market.
How Can You Do This?
- Consolidate Your Suppliers
Where possible, refine the supply chain by cutting down the number of suppliers used. This will reduce the amount of differing lead times and result in less headaches. Could you perhaps order a range of items from one supplier where you have previously been ordering a range of items from different suppliers?
Create a contract with the remaining suppliers, consolidating lead times, therefore aligning both parties’ expectations.
- Increase Order Frequency
It is often believed that ordering in bulk will save money. However, in the manufacturing industry, that generally means longer lead times and therefore a loss of sales if you find yourself out of stock.
A total cost analysis may reveal it is more cost effective to do more, smaller orders to cut lead times and minimise the need for extended inventory management.
- Share Sales Data
By allowing suppliers access to your sales records, they will be able to forecast and anticipate your next order more easily without being prompted.
Sharing the burden of order quantity gives you the benefit of lower lead times, and gives your supplier the benefit of knowing how to best serve you alongside their other customers.
- Focus on the Whole Picture
Many of today’s manufacturing companies still focus on reducing operation lead times. However, frequently, the real benefits can also be achieved by analysing at the holistic, overall lead-time.
Rather than concentrating solely on local machine-orientated optimisation, take into account administrative processes and reducing planning lead-times.
- Reduce Time Spent on Office Operations
Some research suggests that administration can account for more than 25% of total production costs.
Integrated software solutions, such as Sage X3, can manage and streamline these business processes. Software can simplify: requests for quotes; item information management; and product quality registration. An integrated workflow system ensures efficient execution, where lead times can be dramatically reduced and savings made on administrative resource.
To effectively manage lead times, manufacturers must utilise a solution that offers speed, flexibility and adaptability when addressing each new production demand.
Sage X3 enables manufacturers to:
- Better control lead times
- Accelerate production cycles
- Increase the flexibility and adaptability of production schedules
- Ensure the delivery of consistent quality
- Take advantage of new commercial opportunities
These 5 simple steps will help to keep your business competitive in the national and global economy, saving you time, money and resources.
Wondering how Sage X3 Manufacturing can help you? Take a tour and watch our Test Drive Video!
The video covers BOMs and routings, work orders, production allocation and tracking, quality control and more!