According to the U.S. Department of Commerce, shoppers spent $601.75 billion with online merchants based in the U.S. an increase of 14.9% from the previous year. With so much opportunity to be had online, it’s no wonder that manufacturers are ditching the traditional selling strategy of using a middleman, for the modern direct-to-consumer (D2C) approach, that allows them to:
- Have more control over their business
- Leverage their brand’s online presence
- Develop their own marketing campaign, and
- Increase their profit margin
That’s why we’ve put together this blog to help you increase your productivity, so you can keep manufacturing and fulfilling your online sales.
You can manage your business with pen and paper, or within spreadsheets. But this is going to be a massive drain on your resources. This is where eCommerce automation can help. The purpose of using automation software in your business is to help you perform your day-to-day, repetitive tasks, so you can get back to the shop floor quicker to focus on manufacturing your products.
Better still, most manufacturing software has been built specifically for those selling via eCommerce, so they can integrate their sales channels, production, and accounting to one, centralized dashboard.
Which is quickly becoming known as the winning formula for D2C manufacturers:
Ecommerce + Smart Manufacturing Software + Accounting Tools = Success!
Using automation within your business is going to allow you to:
- Generate a master production schedule for your business
- Gather valuable data on your production lines performance
- Improve your raw materials and finished goods inventory management
- Implement lean manufacturing
- Manage any outsourced production remotely, and
- Make accurate demand forecasts by easily identifying your popular inventory
Develop a Master Production Schedule
A master production schedule (MPS) is an essential document for manufacturers, detailing:
- What you need to produce
- How many units you need to produce, and
- When you need to produce it
You'll record everything and anything related to production in this document, including your manufacturing lead times.
The objectives of an MPS are:
- Making your demand flow smoother
- Keeping your lead-time low
- Standardizing communication across your business
- Helping you keep production stable
- Generating workable plans for your manufacturing orders, and
- Assisting you in making accurate purchases and transfer orders
Without a proper MPS in place, you’re going to struggle to increase your productivity, as this document is the all-in-one system for managing your entire production, to help you keep up with your eCommerce sales.
Your MPS is going to give you control over:
- A product list, which will help you identify your more popular products and prioritize them.
- Variation sub-lists for each product. You can record the variants for each of your products.
- Production planning. You can plan your production by yearly, monthly, or weekly periods, allowing you to create forecasts and make adjustments for variables.
- Production quantities. Perfect for those following a make to stock workflow, you can use your MPS to determine the ideal number of units to produce.
- Reconfigure your routing manufacturing. Routing manufacturing, also known as production routings, is a map of your factory that details the processes raw materials pass through as it’s converted into finished goods.
Mostly focusing on your routings and tasks:
Display the production flow your products follow for completion, and this map can span across a huge supply chain. For example, when sub-assemblies are sent to different locations to be assembled.
Your routings will also highlight the specific materials and equipment/machinery that’s used when manufacturing a product, with this information being obtained from your bill of materials (BOMs).
Are the actions that need to be performed to make your product. For example, for a furniture maker, this could be manufacturing process steps such as:
- Cutting material
Once you’ve figured out your routings and tasks, you can create a routing document for each of your products, which will list the materials and manufacturing processes to finish production, in the chronological order they need to follow.
Improve Your Inventory Management
Optimizing your inventory management, regardless of which industry you operate in, is going to be essential when improving your production. Inventory management is the goal of keeping track of all your raw materials and finished goods you have in stock.
The costs of bad inventory management are high, be that in the form of over or understocking, not finding the perfect balance with inventory management will either drive up carrying costs or drive away customers from long delivery times.
Here are the different types of inventory manufacturers can work on improving:
- Raw material inventory
- Work-in-progress (WIP) inventory
- Finished goods inventory
- MRO (Maintenance, Repair, Overhaul)
- Assembly items
Improving your inventory management is going to help you increase productivity by:
- Improving the accuracy of your manufacturing and order fulfillment cycle
- Use storage space efficiently and keep inventory organized
- Reduce waste
- Save time and money by lowering your production time
If you want to thoroughly improve your entire eCommerce manufacturing business, an approach you can take on your production floor is to adopt lean manufacturing.
The objective of lean manufacturing is to:
- Reduce waste
- Lower inventory levels
- Create efficient systems
And to achieve these objectives you’ll need to follow the 5 S’s of lean manufacturing:
- Seiri: Sorting your tools and parts efficiently and making sure instructions are included.
- Seiton: Organizing your tools and parts so that you can easily identify and use them.
- Seiso: Keeping your workspace clean.
- Seiketsu: Scheduling and performing the first three points daily.
- Shitsuke: Establishing all the S’s as an order to be followed at all times.
Lean manufacturing was developed by Toyota to help them survive a post-war Japanese economy, with a focus on mass production on the lowest cost per item by economies of scale.
Basically, with lean manufacturing you will be scheduling work based on actual sales.
Outsource manufacturing isn’t just a great tactic for mitigating start-up costs, but it’s also a valuable tactic for quickly increasing your productivity. Outsourced manufacturing is when a business contracts a third-party company to perform production services that are traditionally carried out in-house.
Outsourcing allows manufacturers to meet demand during unpredicted spikes in interest or peak seasons, meaning they can keep fulfilling orders while avoiding huge delays. It’s also a good tactic for manufacturers with limited resources. For example, if you have just a handful of employees who need to perform multiple tasks, outsourcing can help you relieve the pressure, so your workforce isn’t overburdened.
Don’t have all your eggs in one basket; outsourcing is a quick way to boost productivity, just be sure to keep some, if not most, of your manufacturing in-house.
Bottlenecks are congestion points along your production line, which could be due to issues with your resources, such as:
- Tools or machinery that require regular maintenance
- Employers who need training
- Desktops with outdated software
- Inefficiencies with the eCommerce platform you’re using
Regardless of where the bottleneck is occurring within your production, the usual suspects are workloads arriving at a point along your production line too early, or your workstations not being equipped to handle the workload.
Bottlenecks are an unavoidable aspect of manufacturing, but identifying where and how these bottlenecks occur is going to be essential in optimizing your productivity. When evaluating your production processes, you need to monitor points that have unpredictable workflows, and you can do this by investigating the:
- Accumulation of jobs at a workstation
- Throughput rate
- Capacity rates at each workstation
- Wait times
Demand planning is when you analyze previous trends and future forecasts, to predict the demand of your products for a period.
Working on your demand planning is not only going to boost productivity, but also allow you to:
- Store ideal inventory levels
- Increase your profit margin, and
- Even predict future revenue
Here are some of the methods for performing a demand forecast:
Market Expert Method
This will require you to have contacts, but the best way to figure out which direction the industry is heading is to ask the experts. If you can ask several experts, be that business owners in the industry or consultants, you can use their predictions to make better decisions based on their opinions.
Customer Survey Method
The customers are always right! You can put together a survey and ask customers or leads what they're looking for with their products.
Trend Prediction Method
This is only useful if you’ve been selling over a long period, but you can look at historical sales to try and gauge future demand.
There’s a lot of potential waiting to be tapped by manufacturers selling online. However, without the infrastructure in place, your business is destined to fall flat if you aren’t analyzing and tackling any productivity issues.
That’s why many manufacturers turn to Smart Manufacturing Software to help them get more control over their business using automated processes, so they can focus on fulfilling their eCommerce orders. In the world of eCommerce, automation is truly a game-changer.