Common Manufacturing Challenges For SMEs & How To Overcome Them
This blog post explores common manufacturing challenges small and medium sized businesses face daily and how they can overcome them.
Since 2020, the manufacturing industry has been treading troubled waters in the wake of the pandemic, global unrest, and numerous other geopolitical and climate disruptions. Manufacturers who embraced business agility found themselves slowly bouncing back through innovative problem-solving and use of technology. However, ongoing risks remain, and manufacturing organizations continue to face a slew of disruptions and challenges.
In this blog post, we’ve rounded up the top manufacturing challenges plaguing companies today and what your organization can do to solve them. Let's dive in.
🔴 Manufacturing Challenge #1: Shortage of skilled labour
There have been a record number of unfilled manufacturing jobs in 2022 and it was estimated that there would be a shortfall of 2.1 million jobs by 2030. A survey conducted by the Manufacturing Institute and Deloitte Consulting LLP found that as the workforce ages, workers are retiring from the industry in droves, while jobs are still being created because of business growth. Added to that, there are the side effects of the pandemic, a negative perception of the manufacturing industry that impacts recruitment, and a higher demand for tech-related skills.
✅ What manufacturers can do to solve this challenge:
Start by retaining the workforce you have. Create incentive programs, introduce employee stock ownership plans, increase workplace safety and bring automation to the production floor for improved workload assistance. You can also explore ways to add flexibility across the organization in order to attract and retain workers. Offer training programs to upskill your current workforce and create partnerships with educational institutions to lower the risks of entry-level hiring.
🔴 Manufacturing Challenge #2: Inventory management
Big or small, manufacturing companies struggle with managing everyday production and inventory. From upkeep to coordination with vendors and suppliers, stalking repair parts, and managing daily operations, inventory management is a whole world within the manufacturing system. Combined with the labor shortage, this becomes even more difficult.
✅ What manufacturers can do to solve this challenge:
Ensure your organization is practicing good inventory management strategies. You should also invest in a modern ERP solution for manufacturing that will offer robust inventory management capabilities. This will allow your inventory managers to always keep up with inventory levels. They’ll obtain a unified view of inventory, warehouse, manufacturing, service, and logistics all under one platform. Many modern solutions also come equipped with a demand forecasting module that can be used to predict demand based on your historical data, market trends, and other factors such as material availability or changes in customer preference.
🔴 Manufacturing Challenge #3: Supply chain disruptions
With the ongoing disruptions over the past two years, the global supply chain has taken a hit. The global shutdown following the pandemic created multiple choke points throughout the supply chain. Shortage of supplies, lack of skilled labor, and decreasing demand, are problems that the current manufacturing ecosystem is dealing with. Plus, due to the current global geopolitical unrest, such as the Russia-Ukraine war, more bottlenecks are being created which result in the delayed supply of goods, exponential increase in cost, and shortage of products are some of them.
✅ What manufacturers can do to build a resilient supply chain:
Proactivity is the key to building a resilient supply chain. This is what makes the difference. Here are some steps to take:
Rigorous Inventory Tracking
It is about understanding what you need and what you don't. By carefully monitoring the inventory, you are on top of the inventory issues to decide if you need to increase stock if an upcoming shortage is inbound. Also, it helps avoid unnecessary inventory overload.
Avoid overreliance on one vendor
If the pandemic has taught us something, it must be how we need to be prepared for the unexpected. Over-reliance on one supplier alone puts you on the spot if anything happens. Instead, find other partners you can count on when your go-to supplier fails to deliver.
Protect bottom line profits to ensure sustainability.
Identify and stalk up the raw material or goods you cannot do without while the prices are low. It ensures you are not affected by price volatility due to shortage.
Use a modern cloud ERP system for more insight
A modern cloud ERP solution will build supply chain resilience by providing data consolidation and visibility into all your operations. Modern solutions also come equipped with features to help you predict stockouts, forecast demand, and more.
🔴 Manufacturing Challenge #4: Emerging technology & staying competitive
There is ongoing pressure on manufacturers to digitally transform their processes in order to increase efficiencies, remain competitive and protect long-term profitability while reducing costs. But many smaller and mid-sized companies find it difficult to compete with large-scale corporations who can afford to create smart factories and use the latest technology like AI and robotics to make their production lines more efficient. Some companies also face the issue that by the time their IT team has researched and selected a solution, there is another better and more relevant solution out there.
✅ What SME manufacturers can do to solve this challenge:
You can increase efficiency and transform your manufacturing organization by ensuring you have a strong foundational technology such as cloud computing. In fact, if your company has not moved to the cloud yet, you are missing out on numerous cloud benefits. Cloud ERP solutions enable computational power, visibility, agility, speed, all while reducing your costs. But before you begin anything, you should have someone internally or use an external partner to figure out what your functional requirements are to find the right solution for your business needs.
🔴 Manufacturing Challenge #5: Rising cybersecurity threats
There have been countless high-profile cyberattacks across industries in the past two years. Smaller organizations find themselves equally at risk as they find themselves in the crosshairs for ransomware and phishing scams. Cybercriminals can cause harm that extends beyond financial loss – they can also shut down operations, disrupt supplier networks and comprise your company’s safety and productivity. The risk of data breaches and cyberattack is omnipresent in today’s landscape, so you need a solid plan to protect your company data.
✅ What manufacturers can do to solve cybersecurity challenges:
First off, you need to ensure that all your software is up-to-date and running on the latest version. Companies who are still running on legacy software or are behind on their upgrades are at greater risk because they do not have the latest security features. Secondly, follow best practices and maintain multiple layers of security which can include multi-factor authentication, firewalls and 24/7 monitoring. Finally, educate your employees about the importance of changing their passwords regularly and educate them on the warning signs so they can recognize and avoid spam or phishing emails.
Transform Your Business with a Cloud ERP Manufacturing Solution
Whether you’re looking at your first ERP solution or are ready to move from your on-premises ERP to the cloud, the Kwixand Solutions team is here for you. Based in Vancouver, Canada, we are a Microsoft Dynamics 365 Partner, and ERP consultancy that helps manufacturers across Canada and USA digitally transform and achieve their long-term business goals. Book a free consultation with us today or get in touch directly at email@example.com or 1-604-256-5800