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Key Problems and Underlying Issues faced by Manufacturers

Manufacturers face a broad variety of problems in managing their day to day operations. Some of these are external facing while some are more internal in nature to their operations. Here is a summary of some of the key problems faced by manufacturing organisations:

  1. Supply chain: The manufacturing value chain involves several vendors and suppliers that are interlinked together. Managing a network of suppliers can become quite complex, especially when there are dependencies involved. Any disruption which affects the suppliers will end up affecting the manufacturer’s output as well, and it can have a ripple effect on other suppliers as well as the company's customers. Delayed shipments, product not meeting specifications and inadequate transparency as well as traceability of all input material are some of the prevalent problems that manufacturers face from their supply chain. Additionally, if international trade is involved, some of these issues become more prominent. Managing inventory with changing or cyclical demand is also challenging. Manufacturers have to balance high inventory costs with the risk of not meeting customer demand due to inadequate inventory.

  2. Quality: Manufacturers need to ensure there is quality control at each key step in the value chain, even at their suppliers. Input material specifications may change or evolve with time. Also, the manufacturer's purchasing team might change the input material based on cost, timeline or other such considerations. Suppliers may allow deviations in their processes from time to time to complete an order - this might end up affecting the product quality downstream in the value chain. Maintaining consistent quality even with potential deviations in the manufacturing process is one of the key challenges that manufacturers face.

  3. Downtime: There is a wide variety of equipment and machines being used by manufacturing companies. Any downtime or breakdowns of any equipment or machine might lead to disruptions in the manufacturing processes for a company. Ensuring teams stick to maintenance schedules and procedures is always a challenge with tight deadlines to meet to ship out products to customers. Often, it is also seen that manufacturers end up purchasing refurbished or used machinery to save on costs. Manufacturers need to ensure that the key functionality of such machines are fully restored to perfect working condition before these are incorporated in the production shop floor.

  4. Expertise: Manufacturers seem to face a perpetual lack of talent for their operations. Lately, it is seen that the manufacturing sector has fallen further down in the preference list as the top choice for employment for new workers. Also, experienced workers are trained in old tools and technologies and they need to upgrade their skills. This becomes especially relevant when companies want to upgrade to Industry 4.0 technologies or introduce automation in their operations. While up skilling is possible to an extent, some of the new, latest technologies require extensive training and new workers will be needed to fill the skill gap. Hiring and retaining good talent in manufacturing is increasingly becoming difficult for companies.

  5. Advancements in technology: Manufacturers often struggle to keep up with the latest advancements in technology areas such as Industry 4.0, IOT, Robotics, etc. The pace of evolution of technology has accelerated in recent years and it can be confusing for a company to choose from these technologies. Manufacturers end up delaying the technology implementation altogether till their systems are completely obsolete. This leads to diminishing customer experience as other early adapters implement these new technologies and can take away market share from the incumbents.

  6. Compliance: The manufacturing sector is increasingly under focus of governments to ensure companies are complying with all rules and regulations that apply to them. At the same time, laws are continuously getting updated throughout the world, increasing the complexity for companies. Increased scrutiny of products, complete traceability of raw materials, etc. are some of the key requirements for manufacturers that are becoming more prominent. In addition to this, region and country specific compliance requirements also need to be adhered to. Companies need to be proactive in identifying problem areas for their operations and implement solutions to meet and possibly exceed the mandated targets.

While these problems are fairly common, a concentrated effort is needed to identify and resolve them. It can be seen that these problems are often indicators of a deeper issue that plagues the organization. Solving these problems one by one may not yield the desired outcomes or may even turn out to be counterproductive if the underlying issues that cause these are not addressed. A comprehensive analysis is needed to identify these root causes so that one can devise relevant strategies to mitigate their effects. The most common underlying issues due to which these problems manifest in the first place are:

  1. Information asymmetry: This can be both within and outside the organization. If various teams do not have the relevant information at the right time, decision making by the company's managers may not be optimal and on-time. For example, if the marketing team does not communicate a change in customer requirements or quantity well in time to the production team, they might end up making products that may not suit the customer's requirements. Even within a team, different team members may not be privy to all details, thus making the action flow inefficient and prone to mistakes. There can be delays in obtaining information for the manufacturer from its suppliers or other external entities as well, thus introducing another source of information asymmetry for the organization.

  2. Fragmented processes: As an organization's operations evolve, new processes get introduced and added to the existing workflows. Several times, older processes coexist with new ones. This can introduce confusion and complexity in the system and the employees when managing the old and new processes simultaneously. There might be gaps in the processes that are left unaddressed due to this. Due to this, manual intervention might be needed frequently, thus causing disruptions and deviations in the processes. This can have a direct impact on product quality, supply chain management, and managing day to day operations smoothly.

  3. Piecemeal approach: Solving the small, individual and seemingly disconnected problems on the shop floor may end up not addressing the core problem at all. Introducing a solution to solve one problem can also end up causing a problem somewhere else in the system. Often, companies use temporary fixes for problems while ignoring the root cause of them. An integrated, comprehensive approach is needed to understand systemic issues due to which problems are seen in the manufacturer's operations.

Organizations need to devise relevant strategies to mitigate the challenges posed due to the listed problems as well as identify and address their underlying issues. While there are several general measures that can be undertaken, many of these problems require long term actions to avoid their effects on the operations of manufacturers.

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