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How manufacturers can thrive when prices rise

The pandemic stuck a large monkey wrench into just about every part of the economy. Manufacturing has certainly not come out untouched. Cost, supply chains, employee viability, customer trust, the issues piled up. But even with the country’s slow and steady rise from the depths of the pandemic to less choppy waters, all is not yet clear sailing. Inflation and the rising cost in materials is raising its ugly head across the land and in the pathway of manufacturer’s across the land. Obviously, we can not dictate the price of things we need. But as individual machine shop owners and manufacturers we can monitor our costs and see what we can do to be proactive on our own behalf. We can develop and follow metrics, like inventory turnover rate. One useful key metric is the time it takes from request for a quote to an actual product for cash transaction. It may be surprising to really note the amount of time lag in between. Buttoning up that lag can be key. Look for bottlenecks. See when and where and at what point of the process man power is most needed and schedule accordingly. Make sure machinery is not the problem. Prioritize tasks and resources. If accounts receivable has issues, do what can be done to resolve these. The goal is take a three month task and streamline it. Eventually costs will improve. In the meanwhile by learning to work smart, you’ve saved what money you could, while eliminating hiccups, bottlenecks and headaches.

Key Takeaways:

  • Reducing idle time between value-added steps improves a company’s operational velocity.
  • Consider increasing prices and offering a discount for those who pay their invoices quickly.
  • While it’s nice to be able to fill orders with finished goods on hand, excess inventory is costly.

“Squeezed between the material suppliers and customers, fabricators have to work extremely hard to maintain their cash flow.”

Read more: https://www.thefabricator.com/thefabricator/article/shopmanagement/how-manufacturers-can-thrive-when-prices-rise

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