Manufacturing Risk or Manufacturing Success: It All Depends on How You Invest

Investment is the smartest way to grow your manufacturing business, and not investing is the biggest risk in today’s fast-paced manufacturing world. 

By Kristin McLane, President of CIMx Software

I recently testified for the State of Ohio House Ways and Means committee on behalf of Governor Kasich’s 2013-14 budget.  The governor has proposed a variety of measures to help small businesses to grow their business by investing.  While some won’t be happy with his budget, I appreciate his focus on growing business in our state, which has not always been business-friendly.  I was excited to see so much interest in investing, and enjoyed meeting like-minded people working toward a better future.

Which made me think about our industry – manufacturing. I want to talk about investment in manufacturing, and why the biggest risk we can take is not investing in our future.

Investing is risk, but a bigger risk is not investing for the future.

Investing is risk, but a bigger risk is not investing for the future.

Investment is risky.  On a good day, it’s an adventure in uncertainty.  There are no guarantees.  Investing well takes foresight, research, and a willingness to accept risk. Investing means taking a big bet and hoping everything will line up just right and lead you to a future that might be better.  It’s based more on speculation than certainty, filled with “ifs” and “maybes,” and not enough “definitelies.”

Investment can be scary, but the outcome for businesses that don’t invest is even scarier.  It’s a mirror-view of what you have today, but with more problems, stagnation and eventual decline. As manufacturing processes and machines age, productivity and profits drops. New technology, new products and systems, and constantly changing customer and marketplace demands place pressure on manufacturers to adapt.  Manufacturers that can’t or won’t adapt or invest will quickly find themselves out of work and irrelevant.

Here’s another way to think about it – take a dollar out of your pocket and put it on the table.  Do nothing with it.  Next year, it will be worth far less.  It will buy less and you lose the opportunity for it to grow at all.  But, as long as your desk isn’t like mine on a Friday, you could be sure your dollar wouldn’t be lost.  If you don’t invest, in the end that’s all you have a – a single, lonely, dollar that is NOT growing your business.

It’s understandable why many are so reluctant to invest. No matter how well-organized your shop floor is, there are unseen issues every day that affect productivity, quality and profit.  Sure, the unforeseen happens even in a structured office environment, but with manufacturing failure become even more obvious. There is no hiding when parts don’t ship on time and customers are left waiting, or quality control problems show the deficiencies on your shop floor.

Maximize your return by investing early. Photo by www.colourbox.com

Maximize your return by investing early. Photo by http://www.colourbox.com

Investing is adding more variables to the shop floor equation. There is more change to manage, and more risk to mitigate.  Manufacturing is never a sure thing, and there are advantages to being risk averse.  Prospects we talk to are always worried about the risk of changing their shop floor, implementing paperless, and changing the way their operators view work instructions.  Will this change improve operations or add complexity?  I understand their worries, and I know responsible leaders will ask tough questions and consider the ROI.  I know I would.  But it is equally important to consider the reward, and the risk of doing nothing.

Manufacturers come to us with challenges and problems.  They seek manufacturing solutions.  Without investment, productivity and profitability stagnate or decline.  How much money is lost if you don’t address problems as soon as possible. How much improvement will make an investment worthwhile. Consider that hypothetical dollar on your desk – what will your business do if you don’t invest or grow.   How much money are you throwing away to quality control problems, out-of-control documentation, or process inefficiencies?  How can you mitigate the risk of a new system with the risks of your current processes?

Our goal with any project is to mitigate risk.  CIMx provides tools to our customers enabling them to limit risk when they decide to move forward in a project.  For example, our customers select, pay for and implement only the features and functionality they want.  Customers take on only the risk, cost and change they are prepared to accept.  This is why CIMx designs software that can easily be upgraded.  As technology and production change, our customers can easily adapt with free software upgrades that can be completed in as little as 30 minutes.

We walk hand-in-hand with our customers, sharing both the risks and the gains.  Our goal is to ensure we all win, and investment builds the manufacturing business.

And it is working.  One of our clients calculated cost savings when they implemented a paperless manufacturing system of over 7 ½ weeks of labor for each work order produced for the shop floor.  Considering the average salary of an engineer, that’s more than $12,000 in savings for each work order.  On an average week or month, that’s additional profit, and doesn’t even consider other benefits to paperless manufacturing.  This is savings and benefit gained after investment.

It’s time to stop thinking of investment as not only “problem-solving,” but also “business growth.” Our reluctance to move forward and embrace opportunity to meet the future is holding business back.  If you’re not willing to invest, can you expect your business to grow?

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