If everything went off without a hitch in manufacturing, life would be much simpler for those who make the products that are essential to our lives. Of course, nothing goes off without a hitch, but facing the challenges head-on can develop new ideas, improve problem solving skills and lead to better products, more efficient processes and a higher ROI. Here are four you would do well to put on your to-do list, with some interesting ways to resolve them.
1. Shop floor labor shortages
The manufacturing labor shortage has abated in some areas, but the industry is a long way from resolving it. During the first trimester of 2023, the U.S. manufacturing industry totaled approximately 686,000 unfilled jobs. Based on a study, the National Association of Manufacturers is forecasting up to 2.1 million unfilled jobs by 2030. The largest number of unfilled positions range from assemblers, fabricators, and first line supervisors to welders, cutters, machinists and industrial machinist mechanics.
To cope with the difficulty of hiring enough workers, many manufacturers are deploying alternative strategies besides recruiting employees:
- Automating processes to reduce the need for manual labor
- Offering internship, training and certification programs to encourage careers in manufacturing
- Collaborating with local educational institutions to encourage and educate students about the benefits of manufacturing careers
- Creating collaborative partnerships with American veterans to provide manufacturing career opportunities
Automation is the most practical way of addressing labor shortages, and it’s where the industry is headed. Processes can be completed faster, lowering labor costs and improving efficiency. However, don’t overlook non-traditional ways to attract qualified people to manufacturing. The time has come to put creativity to work in solving the shop floor labor crunch.
2. Shortage of financial experts
At Global Shop Solutions, we see many of our customers struggling with personnel shortages in finance. Their CFOs and other financial professionals are retiring or moving on and it’s hard to find replacements with experience in the company’s ERP system. Further, they may not have the skills required to complete the month end financials in a timely manner. It takes some companies four-to-five months to complete their financial statements, and longer to hire the qualified people they need.
To help these customers resolve their financial hiring problems, we provide a consulting service, Virtual Controller, that produces their monthly statements for them. Services include financial health checks, reconciling accounts receivable and payables to the general ledger, inventory batch processing, inventory reconciliations and more. Virtual Controller also closes a financial skills gap that could have a serious impact on the business by teaching current employees how to analyze what’s happening from a financial perspective, identify areas for improvement and uncover issues that may need correction. A Virtual Controller consultant can be used on an interim or continuous basis to handle routine financial tasks for manufacturers impacted by the labor shortage.
Some of our customers take a different approach by hiring an outsourced CFO on a temporary basis. The CFO ensures the books are in order at the end of each month and devotes time to training financial employees on various processes. Whether using Virtual Controller or an interim CFO, having a financial gamechanger helps manufacturers do more with less.
3. Managing ongoing supply chain issues
The global supply chain system continues to face problems, ranging from unsettled operations and unpredictable global events to smaller trade networks and more time-consuming oceanic trade routes.
In this environment, manufacturers should expect continued difficulties when planning around uncertain lead times, job scheduling and customer delivery times. Electric Power Design (EPD), an engineer-to order manufacturer of power systems to efficiently manage energy supplies, has found a workable solution.
With years of experience finding new ways to provide what customers need, EPD uses the Inventory ERP application to enable engineers to design around existing inventory and offer equivalent products that may have a small change. When EPD doesn’t have the materials on hand to make the product customers want, engineers develop new product lines as a workaround.
The key is having an Inventory ERP application that provides real-time information to keep material counts accurate and up to date and creates forecasts for purchased and manufactured parts. The Planning & Scheduling ERP application helps accomplish this by performing material capacity planning to avoid overuse of excess inventory that could affect jobs already in the schedule. Knowing what you have in inventory and how much plays a vital role in managing the challenges of global supply shortages.
4. Increasing efficiency with automation
With lead times for customers getting shorter, using ERP software to automate time-consuming manual processes can drive high efficiency rates that make it easier to deliver jobs on schedule. For years, Cardinal Systems, a manufacturer of custom pool products, struggled to create work orders, perform inventory counts, and other basic production tasks in a timely and efficient manner. Recording actual labor and material costs, managing inventory effectively, and capturing shop floor data in a timely manner also presented major problems.
To overcome these challenges, Cardinal Systems upgraded to an advanced ERP software system and set their sights on automating as many processes as possible. They began by installing 15 Shop Floor Data Collection stations on the shop floor. Workers now digitally log on to work orders and job sequences and the application tracks all labor time as it happens. Labor costs are captured down to the penny in real time.
Instead of spending time trying to locate manual work orders, shop floor personnel can access them in just seconds via the data collection screens. They also use Paperless software built into the ERP system to execute material transactions in real time from anywhere in the shop. Production moves faster and jobs are completed on time for delivery.
Other automated processes that play a key role in high efficiency rates include scheduling, purchasing, inventory management, work order generation, employee messaging and more. Don’t let manual processes slow you down when these features are available in one integrated ERP system.
