The Rising Cost of Manufacturing
Doom and Gloom
If you are one to read industry magazines, you will have the same feeling as us, doom and gloom for manufacturers! There is no doubt that these are worrying times with the cost of - well, just about everything - going up, from parts and materials, to labour, to packaging and the cost of transportation. There is also pressure to reduce energy emissions all while trying to maintain product quality and process efficiency.
Inflation is topping the chart as another worry for businesses. Inflation makes planning for the future more difficult, squeezes profit margins further and causes businesses to be nervous about future investment. Wages are expected to go up by 3-5 per cent this year and the cost of borrowing continues to increase. There doesn’t seem to be one element within manufacturing that hasn’t been or won’t soon be negatively impacted.
Importance of Being Competitive
To date, many manufacturers have absorbed these rising costs but it is only a matter of time before these will have to be passed on to the consumers/buyers to try and level up profit margins to an acceptable, sustainable level.
These price increases will in turn cause havoc in the marketplace with customers more likely to then look elsewhere for cheaper products from other manufacturers, home or abroad. The need to be competitive is as important now as it has ever been.
How to Mitigate Rising Costs
So how can manufacturers mitigate their rising costs and still remain productive, efficient and of course - competitive?
In recent industry articles the embracing of new technologies is definitely a headliner. There is no doubt that the Industrial Internet of Things (IIoT) can play a huge part in helping manufacturers become smarter, more predictive, more efficient, more reliable (the cost of downtime alone is over £180billion for manufacturers – every year!), more productive and most importantly, more cost effective. Even with government backed support to increase the use of digital technologies, it can still be expensive and quite often fails at the first hurdle, due to poor implementation.
Back to Basics
Perhaps we should all go back to basics here! There are many processes and tools that can be implemented within a manufacturing facility that can help improve efficiency and save money, before we even consider investing in IIoT. In fact, as much as IIoT can transform a manufacturing facility, it will only prove fully effective if the plant is actually IIoT ready in the first place.
MCP have a wealth of experience within the manufacturing industry and believe that plants should implement a number of processes to ensure that the site is running as efficiently and effectively as it can. Following our programmes, facilities can become more productive, equipment more reliable, money can be saved and staff moral can be enhanced to form a better working environment and motivated work force.
By following our guidance, you can re-build the processes within your manufacturing plants to follow best practice and even benchmark your site with others within the same industry. Not only have we helped many organisations become World Class we have saved them literally £millions along the way.
Once our recommendations and processes are in place, only then should we turn to utilising IIoT technologies to enhance the performance of the site further. A successful IIoT journey needs to be based on an already well organised, well maintained, well documented and well managed site. This can only be achieved with a firm structure, effective leadership model and robust processes.
Stick with Us!
To help our clients mitigate their rising costs we are going to produce a number of White Papers covering topics that we know should be addressed, these include:
How to better utilise labour
How to increase reliability
How to increase productivity
Reintroducing Lean Manufacturing, the forgotten way to reduce costs
When is the best time to embrace IIoT
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