Is Your Technology Hurting Your Bottom Line?
Although the manufacturing industry’s adoption of technology continues to increase in response to competition, demand, supply chain issues, and the labor shortage, many organizations are still dealing with bottlenecks, overdue deliveries, and increased production costs.
In fact, productivity growth in the United States manufacturing industry declined over the past decade — despite this period being referred to as the Fourth Industrial Age or Industry 4.0. This left many companies wondering if their technology is working properly, if it’s worth the cost and effort to maintain, or if they should move to new technologies.
In this article, we look at why you might not be seeing the value of your technology and what you can do to fix it.
Why You Need to Audit Your Technology Regularly
To determine how much your technology is impacting your bottom line, you need to evaluate the effectiveness of your current processes. How many of them are manual, how many of them use technology effectively, and how many of them could be automated?
If you have an overreliance on a specific process or if the process requires many time-consuming manual tasks, a technology audit can be a crucial first step to improving the productivity and effectiveness of the process.
While you’re auditing your manufacturing costs and equipment, you need to be asking yourself the following questions:
- Am I doing things manually that could be automated?
- Am I using the right technology?
- Is my technology outdated?
- Am I using my technology to its full potential?
Am I doing too many things manually?
There are many manual tasks that may be important steps in your production line, but that doesn't mean they are smart choices when it comes to your bottom line - especially if they prevent your employees from tackling more critical issues.
If you still have clipboards hanging down the side of your machines, you know what we mean.
Fortunately, Artificial Intelligence (AI) and manufacturing automation have helped resolve this.
But that's why it’s important to consider whether your manual processes are improving production costs or hindering your margins.
Automating manual and repetitive tasks can not only increase your efficiency but reduce the workload on your employees and potentially double operating margins.
Are you using the right technology?
The adoption of technology in manufacturing has transformed the industry in the early 21st century. It gave organizations the ability to increase efficiency, scale production, and streamline relationships with customers.
More than that, it’s allowed companies to solve problems they previously couldn’t and make smarter business decisions.
But some organizations are still nervous that automation and AI will replace their workforce. Successful manufacturers are actually looking at this the opposite way – how can they implement this to augment their labor shortage, along with moving employees into additional or new roles.
The purpose of digital transformation and industry 4.0 is actually to replace time-consuming manual processes such as common workflows, data entry, and defect detection — and empower employees to focus on more important matters.
When it comes to figuring out if you have the right technology to optimize your shop floor there are a few areas to consider:
- Your general shop floor
- Your inventory
- Your quality
- The data coming from your machines
- Scheduling and your schedule visibility
- Your general workforce
Go through and document any problems with your current process and list any technology you feel isn’t performing to its full potential. How integrated is your shop floor? How many of them are taking longer than they should?
If you have a connected shop floor and access to real-time data, this audit won’t take long and you’ll be able to streamline your workflow quite quickly. You will be able to associate the cost of downtime and calculate any opportunities to improve production costs.
You might even find that a combination of time-consuming manual tasks and manual data entry could be the reasons productivity declines. Many times those processes can be augmented with technology and automation.
Is your technology outdated?
In manufacturing, downtime is the enemy and it costs the industry almost $50 billion every year.
Downtime happens when you aren’t able to fully utilize the assets at your disposal and it forces production to stop. This can often happen when your technology is outdated.
Outdated equipment can be:
- Slow, impacting your production efficiency
- Disconnected from your systems, limiting your visibility
- Poorly scheduled so underutilized
- Improperly set up, leaving it more likely to fail
- More expensive to fix as certain parts become obsolete
- Likely to lead to increased downtime
You need timely visibility from your shop floor, otherwise, your standard lead times tend to be based on an average and are not a reliable estimate.
Without accurate data, it can be hard to prioritize your operations, forecast shipping times, and predict cash flow.
Interconnectivity is crucial for today’s manufacturers. You need real-time information to maximize productivity, schedule with accuracy, and drive higher Overall Equipment Effectiveness (OEE).
The good news is that you don’t necessarily need to replace outdated technology in order to connect all areas of your operation thanks to the Internet Of Things (IoT) and Programmable Logic Controllers (PLCs).
But if your technology isn’t outdated and you’re worried it's still costing you time and money, you might not be taking full advantage of your machine’s capabilities.
Are you using your technology to its full potential?
Whether it’s your ERP, CRM, or data visualization tools — if you use less than 70% of your technology’s capabilities, you won’t realize its real value. Instead, you end up with only more operational strain, and underutilized investments.
Updated technology tools are designed to reduce the number of steps it takes to produce your parts and components, prioritize your scheduling, and give you the information you need to continue making improvements.
But each one of them comes with multiple features; it’s only when you take advantage of every feature that you get more accurate data, avoid potential downtime, and optimize overall performance.
When you adopt technology without the proper processes, you leave yourself vulnerable to higher lead times and production costs. The best way to be sure you are using your technology to its full potential is by having a comprehensive technology plan.
Developing a technology strategy, from the top floor to the shop floor, will help you reprioritize and better leverage your technology investments resulting in better returns.
But if you’re worried your shop floor is leaking profit and aren't confident in building out your own technology plan, you can use our Smart Factory Checklist to discover how your shop floor can minimize downtime and maximize efficiency.
ABOUT INSITE BUSINESS SOLUTIONS:
InsITe helps businesses and manufacturing companies get the most out of current and emerging technologies with a customized IT approach to maximize growth, efficiency, insights, and productivity. InsITe is not a typical IT company selling products for short-term, short-sighted fixes. We invest in long-term solutions for a company’s growth by taking the time to learn its products, process, and business goals before bringing tech into the conversation. In this way, we become much like our Clients’ very own internal IT department with familiar faces who understand the business.
If you have any questions about this post please leave a comment. We read and respond to all comments. Or better yet, give us a call and ask to talk directly to our Founder and CEO Mike Schipper 616-383-9000.