Strategies to Survive and Thrive During the Slowdown
Despite the challenges of the current economic slowdown, there are some things manufacturers can do right now to boost the bottom line - and build a stronger future once the recovery begins.
We've talked to some of the experts at WMEP, our customers, and tapped a few of our alliance partners to get their ideas. Some of these strategies offer an almost immediate payback, others require more time. Whatever the case, these strategies can help you reduce costs, rev up your performance, attract new customers and most importantly - strengthen your bottom line.
"Value stream mapping answers the question: What can I do to improve the flow of this product in a way that meets and exceeds customer needs," says Jerry Thiltgen, a Madison-based manufacturing specialist.
The process leads to changes that reduce lead times; reduce work in process and scrap/rework; and improve quality.
2. Streamline office and administrative tasks
Value added flow analysis (VAFA) is a tool that can help you save money and avoid duplication and delays. It can be applied to order entry, accounts payable/receivable and shipping processes.
"Eliminating unnecessary steps, improving the process flow and streamlining these processes can dramatically reduce throughput time," says Brenda Kujawski, WMEP's lean coordinator. "There's a huge opportunity for improvement when a company focuses on the non-production, administrative processes that exist in every manufacturing operation."
Benefits of this approach include: reduced cycle time, improved on-time delivery and increased responsiveness to changing customer demand.
3. Find "hidden" cash in your operations
Heenan's approach focuses on three major cash areas: the timing of payables and receivables; the cost of goods sold and operating expenses; and the selling price. It's a simple process that gives business owners an immediate understanding of where the cash is tied up in the operating cash cycle. The tool also creates "what if" scenarios to illustrate the effects of cash flow in and out of the business, the number of days cash is in the operations process and working capital requirements.
By improving cash flows, business owners can reduce the need to borrow on their line of credit - and save money on interest charges.
4. Embrace the tools of lean manufacturing
Case in point: A recent set-up reduction project resulted in savings of up to $200,000 a year for a Wisconsin manufacturer, said Brian Fairbrother, a WMEP manufacturing specialist. Fairbrother helped the company adopt quick changeover techniques that led to an increase of more than 20 hours of machine capacity a day. The project took only six weeks to complete. Additional savings have been realized from the project through reduced scrap, better tooling maintenance and a better batch-to batch consistency. Maintenance and production staffs have a better appreciation of the changeover and production processes.
Other companies have reported impressive short-term results with cellular manufacturing in terms of attracting new business and greatly improving productivity.
5. Add value to your product or services
"We conduct an internal engineering review during the RFQ stage, before we even know if we are to be awarded the job", says CEO Paul Siodlarz,"and suggest avenues to a
This level of service gives Kald a competitive advantage and helps build long-term relationships with customers.
The bottom line: know your customers and monitor their needs. Constantly reevaluate those needs and find ways to better serve them. It's a winning strategy in any business climate.
6. Generate new customer prospects
"Our lead generation programs are geared to the needs of small manufacturers," says Milissa Rick of WISC, one of WMEP's alliance partners. For example, a manufacturer with less than 20 employees and less than $2 million in sales can receive 50 pre-qualified leads and a list of 500 prospect customers. Leads are categorized by SIC code or geographic location, and it's up to the company to do the personal selling.
7. Consider strategic acquisitions
"The companies that take advantage of these opportunities are the ones that will be successful 10 to 15 years from now," says Christopher Zuzick, principal of Brookfield-based Vrakas/Blum Mergers and Acquisitions. Buying another company often makes more sense than spending thousands of dollars on developing a new product. It also helps keep jobs and dollars in Wisconsin by avoiding the prospect of plant closure.
Acquisition isn't just an option for Fortune 500 companies, it can work for Wisconsin firms as well - as long as your firm is on solid financial footing. "What banks are looking for are strong entrepreneurs with a plan and a vision ... if they believe in the owner, and the industry, they will go out of their way to support them financially," Zuzick said.
8. Look for export opportunities
Keep in mind that 92 percent of exporting companies are small manufacturers with fewer than 500 employees, according to the National Association of Manufacturers (NAM).
You can learn more about export opportunities from the Wisconsin Department of Commerce at 1-608-267-0587. Also, the Wisconsin Innovation Service Center (WISC)
For more information on strategies to improve your business contact WMEP at 1-877-800-2085.
WMEP provides technical expertise and hands-on implementation assistance to small and midsize manufacturing firms on advanced manufacturing technologies and business practices includinglean manufacturing, ISO, value chain management, and strategic repositioning services for manufacturers and manufacturing facilities located in Wisconsin.