This time last year, whilst Australia was still navigating pandemic lockdowns, vaccination rollouts and economic recovery, we shared our Survival tips for Australian manufacturers. During the immensely challenging period for all types of business, we thought it helpful to our peers to share some advice on how Black Lab had remained strong and productive throughout. Investment in R&D and technology, diversifying supply chain risk, and focussing on where we could most contribute to fill the gaps left by flailing offshore suppliers were the strategies that we had embraced to endure the period.
Today, most would agree that the major restraints of the pandemic are behind us with the economy back ‘open for business’. What does remain, however, is a pandemic-induced hangover we’re still struggling to overcome – labour shortages, supply chain problems, inflation, you name it. It’s very much still a difficult ecosystem for manufacturers to operate within.
With that, here are the strategies we are embracing this year, and beyond, to ensure the continued strength of our business and Australian Manufacturing as a whole.
The 5 M’s of Manufacturing Success in 2022.
Managing Increases in Energy and Material Costs
Inflation and an ‘energy crisis‘ have undoubtedly been the defining problems of the first half of this year. Power costs have, for a long time, been a headache for energy intensive businesses like manufacturers but a culmination of a global gas shortage, high coal prices, ageing coal-fired power stations, and a slow transition to renewable energy have only made the situation worse.
Energy represents one of the largest inputs costs to manufacturers that operate facilities with extensive machinery like ours. Consistent improvements to energy efficiency should be explored and implemented all the time, not just in response to price hikes. Early Investment in new technology pays dividends in regards to power costs as much of the focus of innovation these days is around improving energy usage. For instance, successful manufacturers in recent years have integrated the Industrial Internet of Things (IIoT) into their systems. IIoT refers to a digitised network of equipment and devices connected by communications technologies, which gives us access to information and data about our operations that we never before had. It can extract data from sensors on machinery along the line to monitor equipment performance and power usage.
In regards to materials, extensive global supply chain fiascoes, surging fuel prices and labour shortages have driven the cost of materials well beyond any forecasted prices. Whilst we did see some correction following the volatility of mid-2021, material prices are on the rise again, trending up with the sharp rates of inflation being experienced all over the world right now.
When it comes to managing these inputs, much like with energy costs, it comes down to focussing on efficiencies. Optimising material usage through smart design with an emphasis on minimising wastage through production is key. Establishing a diversified system of material supply can prove vital, allowing a manufacturer to draw from multiple sources to pad against sudden price shocks. For the price increases that can’t be absorbed through clever design or diversified sourcing, manufacturers must be able to effectively communicate with their clients to make sure the buyer has a clear picture of why their products may be more expensive moving forward. Staying ahead of price increases and openly informing clients means you’re not passing on shocks to the buyer, allowing them time to cost-in the differences.
Modernising Processes and Equipment
A manufacturer’s machinery is only as good as the way we use it. Millions of dollars of highly capable equipment needs to be complemented by the talent and systems that we assign to running it. The innovation in manufacturing equipment and processes is rapid, and Industry 4.0 is having major implications for the efficiency and ability of our factories. Modernising assets consistently proves vital to manufacturing success in 2022
Integrating IIoT, enterprise resource planning software, data systems and cloud computing allows manufacturers to seamlessly interconnect people, processes and equipment and make the flow of projects through our facilities brilliantly simple. Lead times are slashed, wastage and errors are minimised, output quality is improved and most importantly, cost savings are significant over time.
Central to the modernisation of processes and equipment is research & development (R&D). R&D expenditure has waned amongst Australian manufacturers during the last couple of decades and that has been reflected in the productivity and profitability of many manufacturing firms. Manufacturers should set targets for time and spend allocated to R&D on both specific projects and overall operations, doing so builds immense value over time for a manufacturer’s products and process.
Maintaining Staff & Machinery
Just as important as modernising equipment, is the preventative maintenance of machinery that is already in use. Returns on machinery investment grow every day the machine is in use, so extending the life cycle and minimising downtime should be a priority.
Preventive maintenance is not about fixing problems as they happen; it’s about preventing those problems from happening in the first place. By performing regular tasks such as cleaning, lubrication, adjustments, repairs and parts replacement, the equipment is always at optimum performance. We will typically use slower periods where machines may not be in use to perform maintenance, ensuring when jobs come in and the machine is needed, it is ready to perform around the clock.
Today, labour shortages are a prevalent threat to not only manufacturers, but numerous industries that require skilled staff on-location. The shortages plaguing manufacturing, construction and mining in 2022 are not entirely a result of negative migration caused by the pandemic, in fact the problem stems back much further to a deviation away from recognising the importance of the skills required to promote strong industries. Manufacturing success in 2022 requires a wealth of skilled talent.
That means manufacturers must put emphasis on retaining the staff they have, investing the time and effort to up-skill their workforce. Staff that are proficient with the latest technology and techniques are not only going to be more efficient but they are going to value their work more highly. As automation, robotics and software continue to expand the capability of manufacturing, so too does the need for staff to understand and utilise it. These influences can transform productivity and take the strain off staff, mitigating the effect of labour shortages and allowing staff to learn highly valuable and rewarding skills.
Efficiency – we’ve already used this word about 6 times to this point – because efficiencies can always be improved in every segment of a manufacturing business. From machinery, to processes, to staff – constant analysis of efficiency is paramount to manufacturing success in 2022.
Beyond improving energy usage, material wastage, and machinery and staff productivity is perhaps where we at Black Lab perform the most with regards to efficiency enhancements – the design phase. We use our design expertise to ensure the manufacturability of our products, and having an understanding of the capacity and capability of our factory is central to that. During the design phase is when we lock in all aspects of a project, from material sourcing and usage, processes required, flow of work through the factory and delivery and install. Closely analysing each of these steps for efficiency improvements individually, and then collectively, yields noticeable results when it comes to output.
Last, but not least, is the importance of marketing your business. A lot of manufacturers struggle to fully grasp the value of marketing in generating demand for your service or products. This can be for a range of reasons; some see marketing as a sales team exercise, others don’t have the time or resources to allocate, and many simply don’t know where to start.
The world of digital-marketing can certainly be daunting, creating content and distributing this around online can seem like a lot of effort and difficult to attribute to sales made. But these days, the majority of potential buyers will start their journey to purchase online, so sellers need to be front and centre to be seen.
Building a brand in manufacturing is just as important as it is for a fashion label. Your brand is your reputation, capability statement, and point of difference and needs to be remembered when a customer is ready to buy. That means your online presence is paramount in today’s landscape, with your website, social media, and various forms of online communication existing as your businesses public face.
The focus should be on adding value when it comes to marketing. Educating the market about your processes, products, and industry insights creates value around your business and will generate demand for your services.
That’s our 5 strategies for manufacturing success in 2022. Thanks for reading!