Small and medium manufacturing is one of the oldest businesses in existence, dating back to the Middle Ages. Its magnitude has always been both its greatest strength and its greatest vulnerability.
Despite the numerous hurdles posed by the epidemic, governmental reforms, tariffs, climate shifts, and other factors, the manufacturing industry remains upbeat about its prospects.
Even if the future is bright and growth-oriented, small, and medium-scale manufacturing businesses will continue to encounter obstacles in the years ahead. Continue reading to discover the most pressing challenges that manufacturers face, as well as suggestions for possible solutions, including the role that the manufacturing industry will play.
Top 7 Issues of the SME Manufacturing Industry
- Supply Chain Disruption
Supply chain disruptions will continue to be one of the most significant challenges facing the manufacturing industry for the foreseeable future. Because inventories are at their lowest levels in decades, some items cannot be manufactured. Some automobile plants have had to close due to a scarcity of semiconductors from Taiwan, China, and other offshore sources.
Production across the world has also been hampered. Bottlenecks in food processing, electrical equipment, and building supplies are just a few examples. Additionally, the timber scarcity, steel demand, and increased construction material costs have prompted several businesses to postpone their development and expansion plans.
Manufacturing supply chains were exposed as a result of the “real-time” manufacturing culture and restricted stocks. Companies with sufficient financial resources are considering reverting to the days of stockpiling stocks, resulting in an increase in the demand for warehouse space.
- Skilled labor shortage
Manufacturers are unlikely to have enough workers to make their products, even if they have the raw ingredients. There is a lot of rivalry for competent professionals. Shift-work activity has plummeted significantly since the epidemic began, most manufacturers across the world are having problems finding competent workers.
Industries today offer a very competitive compensation package along with a great work environment however the unfavorable view of manufacturing is one of the major factors affecting its capacity to recruit younger people as it’s never considered a white-collar job where the office workers benefit from a clean, climate-controlled working environment. Potential employees on the manufacturing floor, on the other hand, have thoughts of filthy, hot, and exhausting working conditions.
Many manufacturers with outdated facilities are striving to renovate or build new ones in order to shift views and recruit personnel. For recruiting and maintaining competent personnel, a clean, state-of-the-art working environment with climate control, pleasant aesthetics, comfortable break rooms and facilities, and technology possibilities to decrease physical strain is vital.
- Worker Safety
Small and medium enterprises are more conscious of the need to safeguard their employees from potential health hazards. Physical safety from trip and fall dangers, as well as compliance with regulations, remains a top emphasis. Employers, however, are equally concerned about limiting infection risks, aware that an outbreak of disease might imperil their already restricted workforces and cause production to halt.
One strategy to encourage a healthy work environment on the production floor and in offices is to improve air quality within manufacturing facilities, air movement, and filters. Manufacturers may also need to expand their storage capacity to accommodate extra PPE equipment, and they may wish to consider redesigning or expanding their buildings to accommodate social distancing programs and future expansion.
- Emerging technology and cybersecurity
Technology is one method that industries are striving to address the manpower crisis. While robotics has long been employed in industry to handle certain human tasks, there is a growing interest in investing in more of these technologies.
The demand for IoT technology and innovation has increased as a result of COVID-19, allowing manufacturers to compete in a digital-first business environment. With the rise of linked devices and technological advancements, there is a larger demand for cybersecurity.
While many manufacturers continue to use outdated systems, others have completely embraced modern technology. Both are dangerous, and in today’s increasingly digital world, numerous levels of protection, such as firewalls, multi-factor authentication, face recognition software, 24/7 monitoring, and more, are essential. Updating safe, climate-controlled server rooms is also a crucial step in assuring security and protecting sensitive equipment.
The most effective defense against cyberattacks, however, is to educate personnel on how to spot and prevent phishing frauds.
- Fiercer competition
Due to a scarcity of raw materials and talent, the supply war will be more intense in the next new normal.
As a result of the “demand for extra capacity,” the manufacturing industry, according to various reports, is facing talent wars. According to surveys, nearly half of member manufacturers are having trouble finding qualified employees.
During the pandemic, the abrupt jump in demand for medical and vital commodities resulted in stockouts and heightened competition for raw resources. However several new providers, on the other hand, are also entering the market to supply the materials to secure their market share.
- Greater compliance & Regulatory complexities
Aside from regulatory requirements, regulators’ approaches alter on a regular basis. Regulators will adjust to the new normal by employing both traditional and novel remote procedures, ranging from “records examination to product sampling and quality testing.” This can have a big impact on how you keep up your books. You should plan ahead of time to connect your record-keeping strategy with the new regulatory approaches.
- New-normal work setup
When the pandemic is over, the factory floor and backend units may not function as they once did. To meet new-normal health regulations such as social separation, production may become totally automated or a mix of bot and body. People working from the comfort of their own homes may be able to control backend units remotely.
This new normal necessitates a continuous flow of data throughout the whole value chain. To ensure higher productivity, uptime, seamless cooperation, and faster decision and execution, machine-to-machine, machine-to-human, and human-to-human connections must be frictionless. However, according to McKinsey, most businesses still collect data manually. Digital solutions that enable automatic data collection, according to McKinsey, can assist remote workers to gain insights and monitor factory performance in real-time.
Many small and medium enterprises start their journey with a brilliant idea but struggle to turn it into a star company. We have identified the key factors that build a robust organization both internally and externally and can be used as a framework to scale your organization to the next level consistently.
Top 9 Focus Points for Continuous Growth and Success of SMEs
- Have a vision and follow it
An organization’s vision directs its stakeholders in the right way. Any organization must see how it wants to be perceived as a whole, what it will provide, and even how individuals outside the organization will perceive it in the future. Each organization’s path will be unique, but everyone on the inside should be aware of where it’s going.
- Focus on your customers
Manufacturing businesses are increasingly looking for innovative ways to better understand and engage with their customers. Many industrial organizations are implementing customer-centric business strategies that include both digital and physical services. Customer centricity is more than giving outstanding customer service; it includes offering a terrific experience from the awareness stage through the post-purchase phase. It’s a strategy that revolves around putting your customers first and foremost.
- Keep processes simple
The key to long-term, dependable growth is a set of simple processes. A core set of Standard operating procedures(SOP) lies at the heart of any successful firm. Scalability necessitates procedures and systems that are repeatable and predictable. Successful company executives understand how to keep things simple. They know how to take a difficult situation and simplify it. Complexity takes time; it slows down enterprises and prevents them from growing. Growing firm leaders and stakeholders should be conscious of the consequences of increasing complexity and take steps to simplify the company’s operations and strategy.
- Invest in production & equipment
When you’re in the manufacturing industry, it’s only natural to place a premium on production methods as you grow. When you’re trying to increase sales and demand, a fault in the production process is a definite risk. While this may imply that your product is popular, it also indicates that you have another problem to deal with.
When consumers see empty shelves or receive notification of a product’s unavailability, the failure to keep up with demand can be off-putting. This risk is extremely harmful to small enterprises that have yet to establish a brand or reputation.
These issues may be readily avoided by investing in your manufacturing process and utilizing technology. Identifying bottlenecks and acquiring modern equipment are two methods to achieve this so that you can keep up with high client demand while still delivering retail items.
With technology-based equipment in place, any inefficiencies in the production line may be further alleviated, preventing a breakdown in the scaling-up process.
Make certain that the area is secure and burglar-proof. Invest in fire ducts and smoke detectors, as well as locks and bolts, to ensure that you are protected from the effects of unanticipated catastrophes.
- Invest in employees
Employees that are rewarded for their efforts work harder for companies that invest in them. Investing in your staff allows business to develop since top talent will be attracted and retained. Employees that are appreciated will be loyal, support the company’s goal, and go above and beyond to help it flourish.
- Innovate, and keep innovating
Innovation isn’t just about having a “eureka” moment or launching exciting new products or one-hit wonders. True innovation is an invention that is long-term. From operations to employee training, to goods and marketing, your company has to be innovative.
Manufacturers must cultivate a culture that encourages continuous innovation. And if you don’t innovate, you run the danger of being surpassed by those who do, Nokia and Blackberry are the examples we have seen in recent times.
- Use Technology & data to drive growth
Data is the key to long-term growth. Manufacturers who use data analytics may cut down on process faults and save time and money. The use of statistics and other quantitative tools to evaluate and improve processes is referred to as analytics. Operations managers must understand how to use historical process data, recognize patterns and correlations among discrete process stages and inputs, and determine which factors have the biggest impact on production.
In a manufacturing setting, scaling your business processes might be difficult. Use the growth techniques described above to help your firm achieve long-term success.
- Build Partnerships
Transitioning from a small to a larger company takes time, and that time might mean tight margins while you pursue unexplored sales opportunities. It helps to have a strong network of clients, customers, and suppliers on hand to reduce these expenses.
It’s all too easy to ignore your suppliers, but by cultivating positive relationships with them, you may save money on material costs, which are crucial in the production line as you grow your small business.
Having solid relationships with consumers and clients will also help to keep your financial sheet stable. Thus, if you’re having trouble attracting new clients during the initial few months of your business, you can always rely on your existing clients and consumers.
In any case, the power of client/customer rapport should never be underestimated because it may have a significant impact on the course of your organization
- Reduce waste
Consumer demand is becoming increasingly unpredictable, and supply chain organizations are trying to stay up. One of the primary issues they have is changing to a more agile system and lucrative business while dealing with an increase in inventory and reducing excess and obsolete goods. We have covered the issue of obsolescence and waste in detail. Please go through the following link to go through our insight:
How to start and not stop?
I would recommend starting simply by just taking this approach, which has negligible risk, simple and yet an amazingly effective positive step towards our goal of a proactive strategy
A) Take pen-paper or manual method (start now)
Start implementing the recommended strategy using your existing technology resources for a known and low-risk segment of Suppliers within your business to find out what works and what doesn’t. Indeed, this causes efforts, but this will pave the way for better clarity around unknown risks.
B) Take help from us
If you are ready to make a shift from reactive/preventive strategies to proactive strategies and stay ahead of the competition, let’s get in touch.
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Pradeep Mishra – Business Consulting Director, Aurion Systems
