It is no secret that the manufacturing industry has changed dramatically over the last decade. Companies have been forced to re-examine how they do business, from technological advances to a move away from basic labor.
The combination of low-cost labor and the increasing demand for customization has made it difficult for manufacturers to keep up with demand. On the one hand, they are forced to compete with companies that can produce goods at a lower cost, while on the other, they are unable to meet the needs of customers who want products customized to their specific needs.
So how does the modern manufacturing industry overcome these challenges and thrive in today’s economy? Here are some ways that companies are coping with these challenges.
Challenge #1 Competition From Low-Cost Labor
Competition from low-cost labor isn’t exactly a new phenomenon for manufacturers. However, it has become more prevalent over the last few decades as consumer demand for cheaper products increases. For many manufacturers, this means either moving their factories overseas or offsetting the difference in labor costs with technology.
Moving factories overseas has led to many companies using “just-in-time” production, where parts are only manufactured when they are needed. This helps ensure that high inventory costs are kept at a minimum and reduces waste. As for offsetting labor costs, many companies have begun turning to automation to increase productivity.
Automation also helps ensure product quality by reducing the chance of human error. For instance, packaging companies have begun using die-cutting machines to speed up the process of folding cardboard, saving both time and money by helping reduce costs associated with waste materials.
Challenge #2 Balancing Customization and Mass Production
As more and more companies turn to mass customization techniques, many find that it’s frustrating to be unable to meet the needs of their customers. This is because mass production requires companies to cater to a broader audience to keep up with demand.
Because of this, many manufacturers have begun working with smaller batch sizes that allow them to produce items on-demand while still having enough inventory for large orders. This has led to many manufacturers having “just-in-time” production facilities, which help reduce waste and inventory levels.
This has led to a new phenomenon known as “lean manufacturing,” which takes lean production and applies it on a smaller scale. In addition, advanced technology has also allowed manufacturers to produce goods on-demand without having high inventory costs.
Challenge #3 New Competitors from All Sides
In the past few decades, technological advances have made it possible for smaller companies to produce goods domestically. This has led to a rise in competition for the traditional manufacturers, who now have to compete with low-cost labor and new startups across the globe.
However, much like their counterparts overseas, domestic manufacturers have turned to technology to help reduce costs and increase productivity. Automation has played a large part in this, as it has allowed manufacturers to produce goods on-demand at low costs.
This has also led to lean manufacturing techniques, which help companies reduce waste and inventory levels while still meeting customer demands. But of course, automation isn’t the only way domestic manufacturers have been able to reduce costs.
Many companies have also turned to new materials, such as synthetic polymers, for parts they once had to make overseas. This has helped many companies increase their responsiveness and competitiveness while also reducing production costs.
The Future for Manufacturers
While these changes have indeed led to a more challenging economy, they’ve also given rise to new opportunities that were not available in the past. Smaller companies have been able to get a foothold in the industry by specializing in niche markets, which has led to more competitive pricing and greater product variety. This has also made it more appealing for customers to order goods from manufacturers who are closer to them geographically, allowing small businesses to thrive.
In addition, it has also created new employment opportunities for people who are looking to enter the manufacturing industry. While automation has reduced the number of unskilled, low-wage jobs available in many industries, it’s also created more specialized positions that require higher skills.
Whether it’s by increasing productivity or reducing waste, the modern manufacturing industry continues to find ways to cope with the challenges it faces today. While this often means working with smaller batch sizes, many companies can still produce goods on-demand at low costs. This, in turn, has helped restore much of the balance between big manufacturers and small startups that was lost in the past few decades.
While these changes certainly need time to become widespread, they’re already beginning to take effect as the economy evolves. The manufacturing industry has always been at the forefront of technological and economic advancement, and it appears that this will not be changing anytime soon.
