When companies are interested in improving the way they do business, it often involves improved manufacturing management. Unfortunately, manufacturing management is often not fully understood by those people who are involved in decision-making. For that reason, the decisions they make aren't always the most effective for the business.
Manufacturing management is similar to supply chain management. The main idea is to efficiently control the aspects of manufacturing in order to reduce the risk to everyone involved in the long chain from product design to product distribution. Understanding the potential risks involved when businesses do not engage in appropriate manufacturing management is an important part of the process.
The potential risks can be illustrated by a simple example. Company A manufacturers a product and to create that product that need a certain raw material from their vendor. Because Company A's inventory runs low, they place an urgent request to the vendor for more of the raw materials. Since the vendor is unprepared for the order, they have to force their workers to work overtime to meet the request or put other, equally important, projects on the back burner. Meanwhile Company A runs the risk of having to shut down their production because they lack the necessary raw materials. Distributors who are waiting for shipments of the finished product and who have consumers waiting to make purchases get anxious and lose confidence in Company A.
As a result of this situation, Company A loses money because they have to pay more to their vendor for the last minute order in most cases. They also lose money because the distributor may be less likely to stock their products in the future. The vendor may end up getting paid more for the order but they will also have to pay more to their workers, and they may have to use resources set aside for other projects to complete this one. Likewise, distributors may lose money because customers will go elsewhere to get the product they want if they aren't able to supply it.
Avoiding these problems requires businesses to enhance their manufacturing management strategy. Accomplishing this requires five steps: eliminating, coordinating, cooperating, integrating, and communicating.
Eliminating, which is the first step of the process, requires companies to analysis their manufacturing cycle and determine what no longer needs to be done. Many businesses have been engaging in the exact same process for years even though it is not as efficient as it could be.
Once the process is streamlined in this way, the manufacturing activities between the company and the vendors need to be coordinated so that emergency orders became a rare and almost non-existent problem.
Following these two steps, the company must move towards a more cooperative attitude between them, their vendors, and their distributors. Instead of focusing solely on the company's processes, businesses can look for ways to work together with other firms to achieve mutually profitable benefits. Next, integration becomes key. With integration, all of the pieces of the puzzle come together usually with the help of supply chain management or manufacturing management software.
Finally, one of the most important elements in manufacturing management is communication. Staying in touch with vendors and distributors is important so that they know how to plan and prepare for what the company has in store for the future, such as new products or a decrease in production. Communication helps foster success in all four of the other steps and ensures that the management process will run smoothly. Additionally, communication builds a sense of trust and respect between all of the involved parties.