Manufacturers: 6 Strategic Steps to Help Spur Growth
Former New York City Mayor Ed Koch was famous for asking his constituents, "How am I doing?" Similarly, leaders in the manufacturing industry like to take the pulse of the sector from time to time, especially after the economic struggles of the last decade and a lull stretching over the past two years.
Although the Institute for Supply Management said its index of national factory activity rose to 57.8 in June, from 54.9 in May, manufacturing is still expected to weaken somewhat after the “Trump Bump” wears off and the Bull market slows.
Are You Proactive or Reactive?
Uncertainty regarding political, social and economic events is a major concern for manufacturers. It’s difficult to project what the future, but proactive firms aren’t waiting to see what happens next. Here are six strategies that industry leaders are implementing today to help spur growth tomorrow.
1. Incorporate technology.
Instead, new technology can allow you to offer a combination of services, including real-time monitoring of equipment to determine its maintenance needs, daily collaboration with customers to customize and modify equipment, and predictive performance management for large and small projects.
Bundling these services can lead to a more robust operation. With this approach, manufacturers may solidify customer retention and gain access into more lucrative activities.
2. Adjust pricing models.
For instance, if performance-based maintenance based on technology becomes common, fewer repair visits will be needed. Although customers may expect more favorable terms, they may also be willing to share some of the risks. Rather than basing pricing on products and fixed maintenance or warranty costs, fee structures may be tied to results.
For example, a manufacturer may be paid more if downtime is effectively reduced or productivity is improved. Some manufacturers prefer a “blended” fee structure that combines traditional fixed pricing and performance-based pricing.
3. Find a partner.
Strategic alliances aren’t risk free, however. So, you need to balance the benefits of collaborating with a partner with your ability to maintain market share. Consider, too, whether your partner will keep up with the rapid advances in technology. There’s also a chance that your firm could eventually compete with your partner, endangering the entire relationship and perhaps defeating its purpose.
4. Mine customer data.
In light of this technological evolution, manufacturers may be able to achieve a competitive advantage if they hire people who can use this information to help customers improve equipment performance and increase overall productivity. By proactively mining customer data, manufacturers can boost overall revenue.
5. Overhaul IT systems.
To avoid problems, update your IT systems and create a new streamlined infrastructure. As manufacturing technology evolves, it’s critical for IT to communicate throughout the organization with standardized procedures. This can help your firm manage data from thousands of equipment pieces in the field, support supply chains and deliver timely customized reports.
6. Recruit top talent.
Map out a robust technology strategy with specific benchmarks and goals for, say, the next two or three years. Then share this story with job candidates.
During the recruiting process, don’t just advertise for someone who can read data without emphasizing the manufacturing basics. Balanced capabilities are important, allowing the equipment manufacturers to use smart operational data and sensor analysis in a real-time context. This will drive innovation for improving equipment functionality and performance.
Will taking these steps guarantee future success? Of course not. But they’ll likely improve your operations and better position your firm for the challenges that lie ahead. DS+B offers its manufacturing clients an array of benchmarking, cash flow analysis, operational and other financial management review services to help your business target areas where you have the most to gain. Contact us to learn more.