For small and mid-sized job shops, the task of consistently managing sustainable growth can be quite challenging. Granted, when times are good, it is often easy to gain repeat business and sustain growth. For many customers, as long as you ship on time with reasonable consistency and offer a good price, they will continue to place orders. In harder economic times, however, this may not always be enough to keep customers around.
Reason to “Shop Around”
When the economy is down, customers are definitely more prone to “shop around.” If possible, they may even downsize their supply chain. Reducing their supply chain will actually give customers leverage if they want to demand more from their suppliers. The suppliers that they still use will have a larger share of their business, meaning that they can demand better prices and better performance in exchange for not taking their business elsewhere.Ways To Grow Your Business and Increase Sales (Managing Top Line Growth)
Increasing sales is certainly a viable way to grow your business. Unfortunately, doing this in a down economy can be difficult. Doing so often requires a shift in thinking for sales people, where they must go from being “order takers” to “order generators.” This change to proactive marketing and sales activity is not always easy, but is often necessary to drum up business.
For some smaller job shops, this step may be even more difficult. Small shops often don’t have staff specifically devoted to sales or marketing, especially ones that are experienced with proactive selling techniques. In such situations, it may be beneficial to hire manufacturing reps to push your business to new and potential customers. This will save you from hiring additional staff that may or may not be needed later.
Determining the areas of your business with the most potential for increased sales is best done by examining where most of your previous orders were generated from. Shop management software (ERP) is useful for this, allowing you to see at a glance the pertinent information for potential sales leads.Managing the Margin
Another effective way to grow your business is to learn how to better reduce costs and increase efficiencies. These two characteristics can help set you apart from the competition, and increase your desirability to those customers who may be considering other options.
One of the best ways to accomplish this is through the use of an integrated shop management software solution. Such software has been shown to help small and mid-sized job shops increase their efficiency, reduce duplicate data entry, and reduce the cost of managing the day-to-day business operation.
For many small and mid-sized manufacturers, integrated shop floor management solutions have typically looked like just another “expense,” instead of an investment in future growth. They never needed manufacturing software solutions before, so why now? For good or bad, though, the state of the economy has created a more competitive market, and shop floor management solutions offer distinct advantages that can no longer be ignored.
Using an integrated shop floor management system allows shop owners to tie all business functions together, from quote to cash. This integration allows for increased efficiencies not possible before the use of such systems. Some of these improvements include:
- Faster response to requests for quotes
Using an integrated manufacturing solution allows job shops and contract manufacturers to turn around quotes more quickly. Estimators can easily review data from previous jobs or quotes, and using the right ERP system, can then automatically generate quotes based on that data. Such speed has serious benefits.
Studies have consistently shown that shops that turn around quotes in less than three days have a significantly higher win rates than those job shops whose turnaround time is greater than three days. This is an advantage that is easy to maintain using the appropriate shop management software.
- Quick identification of problems which leads to improved quoting
These integrated systems also allow for problems or issues to be quickly identified. If a part does have to be re-quoted, you will be able to account for why that is, and look for ways to reduce issues the next time around.
- Efficient order entry
Entering an order becomes more efficient, as quotes can be turned directly into orders, and previous orders can be copied forward when repeat orders are placed. This eliminates the need for double entry from an Excel spreadsheet or any other standalone quoting system.
Faster order entry also means quicker release to the shop floor. Shop papers or travelers can also be generated automatically from the order. Customers also enjoy the added benefit of receiving direct email acknowledgments for order confirmation, straight from the program.
- Improved scheduling
Scheduling of jobs is greatly improved by using an integrated job shop scheduling software. Jobs can be scheduled and reviewed for scheduling issues as soon as the order is put into the system. An integrated scheduling software allows for the user to place the order into the schedule and immediately see if the job will be delivered on time, if materials must be ordered, or if there is a bottleneck that will prevent the job from shipping on time.
A quality integrated job shop scheduling solution will allow users to utilize visual scheduling tools to try what-if scenarios. This means that the user can move the order around in the schedule easily, and see what the results of its placement will be right away.
These what-if scenarios allow you to determine the best way to resolve conflicts. Scenarios such as overloaded work centers, late jobs, jobs running behind schedule, or jobs projected to exceed their estimates can all be analyzed before the order is even placed. This can help you discover solutions quickly, using all the pertinent information necessary.
- Improved inventory strategies
When a job is scheduled, the purchasing department can automatically generate purchase orders based on the required date for the material needed for production. Because of this, shops do not have to carry nearly as much excess inventory, thus reducing costs. Shops can also reduce the need to expedite material, and the associated costs, caused when there is a lack of visibility for what material must be ordered. Far fewer surprises result in lower inventory costs.
When the schedule of a job changes, or the vendor changes a shipping date for material, placing that information in the system will automatically update the schedule. This can create triggers or exceptions that alert those affected by the issue, all automatically.
- Real-time tracking
Using real-time, bar-coding systems or mobile devices will streamline time collection and material transactions. Shops can improve efficiency and vastly improve tracking ability. Employees can be held more accountable, and managers can identify where improvements increasing employee and job efficiency can be made.
When jobs are running behind schedule, they can be viewed instantaneously. When the schedule is regenerated, jobs will also be updated in the system instantly, which results in an accurate schedule at all times. Whatever is occurring on the floor will be reflected in the system in real time.
- Integrated shipping and invoicing
With the integration of shipping and invoicing, complete and accurate invoices can be generated in a timely manner, ensuring improved cash flow. When the packlist is generated, the invoice can simply be reviewed and updated as needed. There is no need to re-type an invoice based on data that was previously input into the manufacturing system.
- Extending the benefits of an integrated shop floor management software
Shop management solutions today go even further to reduce the cost of doing business and increase efficiency. Using integrated CRM solution capabilities, owners and managers can increase the efficiency of those employees who must either grow the sales of the business or manage customer relations. The timely and accurate information available to these employees gives them the ability to perform at their peak. They can see what has worked, and what has not, as well as understand all pertinent customer information at a glance.
Manufacturing software that includes an integrated quality management solution can also assist quality managers in addressing quality related issues. They can quickly isolate and track down quality problems in real time, allowing them to address them as quickly as possible with all the information necessary.Conclusion
Small job shops may not realize it, but they often “limp” along with their current collection of different solutions for different aspects of the business. Using Microsoft Excel spreadsheets, an accounting solution which only handles the financial side of the business, and various other methods, shop owners have cobble together a system that might work for survival, but not for sustainability. Often, shop owners do not even realize how affordable an integrated shop floor management solution designed specifically for job shops can be.
Integrated shop management software designed specifically for job shops have been shown to:
- Reduce the cost of doing business
- Increase the efficiency of the office staff
- Improve employee morale on the shop floor
- Reduce duplicate data entry
Given how affordable such systems now are, there are few if any reasons today not adopt one. In many cases, shop owners that don’t have an integrated shop floor management software are paying for shop floor systems (with time spent in duplicate data entry or other redundancies) without reaping the benefits of one.
If you want to remain competitive regardless of the economy and help sustain and grow your business, smart shop owners will evaluate their current state of affairs and invest in integrated job shop management software.