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Every manufacturer has an opportunity to improve its operations, but exactly how to do this is not always so obvious (Harald Richter/Getty Images/iStockphoto)
Every manufacturer has an opportunity to improve its operations, but exactly how to do this is not always so obvious (Harald Richter/Getty Images/iStockphoto)

The Top Tens

Ten ways to unlock hidden value in your business Add to ...

Every manufacturer has an opportunity to improve its operations, but exactly how to do this is not always so obvious. The following tips can help these types of businesses unlock hidden value and increase profitability:

1. Changeovers. Customers are increasingly demanding smaller inventory. To meet this demand, manufacturers must run shorter production cycles, which inherently increases the number of times a production line must be changed over. Each changeover can mean a loss of output and opportunity to ensure the shop floor is running at peak efficiency. The challenge is making the customers happy while keeping the efficiency on the floor.

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2. Material giveaway. Many manufacturers inadvertently provide more product in their packaging than listed on the label. For example, consumers may be surprised to find that if they emptied their soda pop cans, they would find much more than the 355 ml listed on the packaging. Many companies overfill containers, so tightening machine tolerances can provide a quick increase in profit.

3. Labour management. Remember the three Rs: The right number of people with the right skills to operate equipment at the right time. This is a constant challenge for today’s businesses. Getting these Rs in check hold much opportunity for managing labour costs more efficiently.

4. Schedule optimization. Time is money. Ensuring that actions are completed in a logical sequence can have a big impact on the bottom line. Let’s say you are a paint company. Moving from producing white paint to black paint will save time when changing product lines as there is less cleaning time required than if you went from the darker black colour to the lighter white.

5. Short interval control. Review performance hourly. In today’s business environment, problems are usually addressed during meetings that take place once a day. This is too late to remedy low performance. Short interval control identifies problems each hour and forces a solution in real time. The productivity increase as a result is often quite significant.

6. Performance metrics. This is the cornerstone of productivity. Often businesses believe they have the right productivity metric but nine out of 10 times, however, they’re off the mark. Putting the time and effort into making sure performance metrics are correct will always result in a greater clarity of the problems and identify where opportunities lie.

7. Capital expenditures plans. Many companies have a “throw money at the problem” mentality. Changing to a “solving at the root cause” culture can avoid millions in unnecessary capital investment.

8. Inventory management. A business never wants to short a customer; nor do they want to absorb the cost of excess inventory. Increasing the effectiveness of inventory management can safely allow businesses to reduce inventory and free up working capital.

9. Machine run speed. Machines typically run less than target speed due to operational problems which can be solved. Additionally, you can be more rigorous in ensuring that each product is being manufactured at the right speed. Often the speed is not changed assuming that one speed is suitable for all products being produced. This will help recover lost production time adding value.

10. Problem prioritization. In most manufacturing environments, “he who shouts loudest” still holds true. Getting a true and objective view of all problems prioritized by dollars is a very powerful way to align a company and bring about fast improvement.

Adrian Butler is the president of Newton North America, a leading operational and financial improvement firm with offices in Canada, Europe and the United States. Newton works with companies of all sizes and has significant manufacturing and industrial experience. Adrian can be reached at adrian.butler@newton-na.com.

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