In the world of manufacturing, delays can sink a business. Manufacturing businesses are defined by their ability to maintain an effective supply chain that fulfills and delivers orders on time. Even though some of those aspects are outside the manufacturer’s hands, they are still responsible for the outcome.
In addition, everything costs more while customers expect to pay less. Rising costs for energy and fuel are impacting operations, putting greater pressure on operations to run more efficiently under constrained budgets. Increased business around the globe can affect everything from freight costs to the price of an international money transfer. That’s before considering the rise in commodity prices. Manufacturing faces some of its biggest challenges in history, and here are some of the ways it intends to overcome.
Transparency and Relationships
Transparency used to be something only the supply chain links had to worry about. The concept of the public taking an interest where their products are sourced and manufactured is fairly new, and manufacturers have struggled to deliver on this ideal. Apple’s Foxconn plant is a good example, where Apple’s lack of transparency led to accusations it worked with sweatshops. Worker suicides at the plant did lead to some improvements in working conditions, but Apple and Foxconn were both criticized for poor business practices.
Managing these relationships is difficult, and requires a manufacturer devoting time and energy into finding local suppliers at an affordable rate that run ethical businesses. When sourcing materials for production, one has to consider labor and environmental practices that previously never factored in. Led by big brands like Wal-Mart, customers are slowly gaining access to this information.
Managing Risk
What if a shipment is held up at the port, or a supplier misjudged and fails to deliver the materials needed? These small delays mean more than the upfront costs of dealing with them. A manufacturer’s reputation is on the line, and small manufacturers are especially susceptible to these challenges. Lack of credit or failure to protect intellectual property are two major concerns.
Some are turning to crowdfunding to try and solve these problems. Crowdfunding is basically a built-in customer base. Some are even willing to pay a premium for a product in order to see that it gets made. Manufacturers who offer special perks and quality builds tend to do well, but crowdfunding carries its own risks too. For instance, failure to deliver or underestimating orders. These trip-ups can lead to negative customer feedback and a decline in sales.
Good Personnel
Today’s manufacturing relies on highly educated individuals who can engineer models and create new innovations. To be successful, high level personnel require a firm grasp of supply chain management and extremely specific skillsets. Growth is quickly constrained by talent, and manufacturers have tried a varying degree of solutions to solve this problem.
The National Institute of Standards and Technology commissioned a report in 2013 that found manufacturers must invest in a national hiring campaign, as well as internships and training programs. The H-1B visa, currently debated at the national level, is another source for talent that has more immediate fulfillment. Without diving into the politics of wage gaps and worker availability, it’s common to see many manufacturers filling gaps in their labor force with national and international candidates.
Manufacturing still has opportunities to grow, but specialized fulfillment requires specific skillsets. Unskilled manufacturing is on the decline, but more startups are utilizing crowdfunding to take the plunge and revive the American manufacturing dream.
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