14 Sep

So Your Sales Are Down? Profitability Doesn't Have to Be

Learn how technology like production monitoring is helping manufacturers maintain profitability as sales soften.

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So Your Sales Are Down? Profitability Doesn't Have to Be

Thanks in large part to pandemic slowdowns, shutdowns, and supply chain disruptions, manufacturers were kept relatively busy this past year catching up on a backlog of orders. But with those orders largely filled, new threats are looming on the horizon in the form of rising interest rates, a slowed economy, and a pullback in consumer spending.

A recent CNN Business article references independent studies from S&P Global and the Institute for Supply Management that present cause for rising concern among manufacturers. Data from these studies reveals that the manufacturing industry slipped into contraction territory this past May for a seventh consecutive month. Even more alarming is the fact that this was at a faster pace than in prior months.

With COVID restrictions lifted, consumers are shifting their spending away from goods to services. And so, while the world’s hospitality businesses are experiencing record-breaking business, the outlook for manufacturing isn’t so bright.

Protecting Profits

For any business maintaining profitability is the key to surviving a slowed economy, and this is especially true for manufacturers. Wells Fargo economist, Shannon Seery, said while backlogs are sustaining activity for some manufacturers, it's just a matter of time before that well runs dry.

“All of last year we saw the level of outstanding backlog come down,” she said. “So that and this hit to demand will make firms decide whether to pull back on their capital expenditures, which we’ve already started to see, or begin to lay off workers in an effort to protect profitability.”

A knee-jerk reaction to minimize the impact of a soft economy is to freeze spending, cut costs, and eliminate jobs. While this circling the wagons approach may help some manufacturers weather the storm, it often leaves them ill-prepared to react to changing market conditions. Moreover, it leaves them well behind competitors who invested in technology to maintain and even grow their business despite slow sales.

Deloitte’s 2003 Manufacturing Industry Outlook recommends manufacturing industry trends that can help organizations turn risks into advantages and capture growth. Key among these is the recommendation to invest in digital technologies. According to Deloitte, companies that made this digital transformation prior to and during the pandemic have shown greater resilience. And continuing to invest in advanced manufacturing technology is essential to continued growth.

Simplifying Technology

Today’s headlines are dominated by terms like Artificial Intelligence, Machine Learning, Big Data, Industry 4.0, and most recently Industry 5.0. This can be intimidating to smaller manufacturers who see advanced manufacturing technology as overly sophisticated, well beyond their budget, and applicable only to large enterprises. They may believe that embracing technology requires a hefty budget, a complete overhaul, and a technically skilled workforce capable of operating and maintaining advanced technologies.

Leveraging manufacturing technology doesn’t have to be complex or costly. Today there is an affordable, scalable, flexible, and highly effective solution designed especially for mid-sized manufacturers. And leveraging its power and benefits is as straightforward as logging into an e-mail account.

Manufacturing Production Monitoring is changing the game for those wanting to invest in digital technology. For mid-size manufacturers, it is the quickest, simplest, and most cost-effective way to identify, quantify, and capitalize on existing opportunities for enhancing productivity.

Production Monitoring: Maximize Resources, Minimize Costs

There are three core elements to attaining and retaining business profitability: operational efficiency, revenue growth, and cost reduction. When revenue is struggling the key lies in efficiency and cost reduction.

Cost reduction can be achieved in several ways, from reducing labor hours and initiating layoffs, to controlled spending, as companies painfully scrutinize where and how money can be saved. For an industry already struggling to attract workers, labor cuts can have lasting effects. Conversely, manufacturing efficiency improvements allow companies to maintain (or even grow) profitability without changes to workforce or adding equipment.

As simple as it may sound, the road to improvement begins with fully understanding your shop floor. Knowing what, how much, and how well you are producing in real-time puts the focus on what needs to improve. Your manufacturing floor contains a wealth of information. The key is to tap into and leverage that information and transform it into metrics that matter. That’s exactly what production monitoring does.

In real-time relevant KPIs are made available to stakeholders in a format tailored especially for the needs of each. Management for example, might be interested in evaluating labor costs, waste, and quantity of goods produced over the last year, month, week, or day.  Supervisors may be concerned with knowing which lines are running and if they're performing as expected in real-time. Machine operators are likely focused on whether their shift is meeting planned production quantities and if overtime is expected.  

Worximity’s production monitoring software provides each stakeholder with the type and depth of information needed to take quick corrective actions or formulate longer-term strategies without overwhelming users.

Measurable Results

Worximity provides improved operational efficiency. In this way, profitability is maintained during times when sales are slow, and enhanced as orders increase. Worximity customers are achieving quantifiable improvement through:

• A reduction in unplanned equipment downtime.

• Establishing benchmarks based on best-performing production lines or shifts.

• Reducing set-up time by ensuring similar jobs are scheduled consecutively.

• Reallocating resources based on needs identified by real-time production data.

The company’s Director of Operational Excellence, Guillaume Ducharme, explained that despite a decline in sales, the system is delivering tangible results. “I was on a weekly call with one of my clients,” he said. “The client explained that while sales were down 10% their EBITDA has remained steady.” Product Manager, Adrian Evi, echoed Ducharme’s observations. “We’re hearing the same across most industries and are experiencing a record number of logins and activity in the platform. Those who are using our software are actively driving efficiency improvements and minimizing the impact of a slower economy.”

Worximity at Work

What do baked goods, HVAC ventilation ducts, beverage products, and custom auto exhaust systems all have in common? The manufacturers of these and similar products are benefitting from smart manufacturing. Companies like Station 22, Martin & Ginger Barkey, Soylutions, Prolifik, and many others are seeing real results with Worximity’s production monitoring technology.

• Voltigeur Farms cut downtime by 64% while increasing productivity by 43%.

• MBRP experienced a 25% OEE improvement while increasing EBITA.

• Mondoux Confectionary boost production by 25% and increased OEE by 10%.

• Prolifik saw a 20% OEE improvement in the first year alone.

In the past, manufacturers were largely at the mercy of a volatile economic climate. Price hikes, spending freezes, and layoffs were largely implemented to help mitigate losses. Today, all of this is changing.

Worximity’s production monitoring solution is putting digital technology, and its advantages, within reach of manufacturers regardless of type, size, or budget.  And these manufacturers who invest in such technology are finding that they can sustain profitability in down times and grow exponentially as sales increase.

Let’s Get Started!

Learn how Worximity and real-time production monitoring can help turbocharge production without adding equipment or labor. Contact us here to learn more.

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