Today’s advanced discrete manufacturer works in a dynamic environment where today’s specialized, smaller-form factor, higher-density products require costly, complex manufacturing technologies that can easily cause costs to spin out of control. The result is often razor-thin – or even nonexistent – margins that draw a fine line between a company’s success or failure.
There are three major areas of discrete manufacturing and supply chain management that can significantly impact profit margins. They are:
Inventory maintenance and optimization
Excessive inventory can be a real profit-killer for any manufacturer, but controlling it effectively can be a risky balancing act that weighs carrying too much costly product against potentially less-than-satisfactory customer relations if customers experience too many out-of-stock delays.
Effective inventory control methodologies, such as Kanban scheduling systems and just-in-time (JIT) delivery strategies, have gone a long way in resolving the excessive inventory dilemma. Still, careful inventory management and optimization is especially important for advanced discrete manufacturing companies so they don’t get caught holding too much inventory if product and manufacturing needs change rapidly.
Today’s volatile economy can make pricing a nightmare for advanced discrete manufacturers. However, Big Data and the latest advances in ADM technology and IT systems can help companies analyze and integrate data from across platforms, suppliers, and customers to quickly and accurately evaluate a host of factors including market conditions, material costs, and customer preferences. The ability to do all this is crucial for determining accurate and realistic pricing in the ever-changing advanced discrete manufacturing environment.
Partnering and collaboration
Effective supply chain management is a key element to achieving and maintaining desired profit margins. Today, more and more advanced discrete manufacturers are opting to develop sales and distribution partnerships to avoid the pitfalls of core competency dilution. Unstable transportation costs, volatile international relations, and domestic economic turmoil are all factors that can dramatically affect sales and distribution which, in turn, can affect the bottom line. By collaborating with the right supply chain partners, advanced discrete manufacturers can offload some of the risks and distractions associated with handling all aspects of sales and distribution. ADM companies must gain and maintain visibility into every aspect of the supply chain to carefully monitor and control costs to not just protect, but increase, profit margins.
A good ADM solutions platform can go a long way toward helping monitor and manage the three major areas we’ve discussed here. By carefully controlling inventory, pricing, and supply chain partnerships, virtually any advanced discrete manufacturer can more effectively drive profitability.