Article | December 21, 2021
When it comes to developing a budget for the following financial year of your manufacturing business, many operations managers start with direct labor and material expenditures. But, what about manufacturing overhead costs?
Manufacturing overhead is any expense not directly tied to a factory's production. Therefore, the indirect costs in manufacturing overhead can also be called factory overhead or production overhead.
Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower-cost goods and services, and causes economic expansion that reduces unemployment and increases productivity and job creation.
– Larry Elder
So, this article focuses on some highly effective overhead cost reduction methods that would help you build a healthy budget for the following year.
Manufacturing Overhead Costs: What Is Included?
Everything or everyone within the factory that isn't actively producing items should be considered overhead.
The following are some of the variables that are considered overhead costs:
Depreciation of equipment and productionfacilities
Taxes, insurance, and utilities
Supervisors, maintenance, quality control, and other on-site personnel who aren't producing signs
Indirect supply from light bulbs to toilet paper is also included in the overhead cost.
Manufacturing Overhead Costs: What Is Excluded?
Everything or everyone within or outside the factory that is actively producing items should be excluded from the overhead costs.
Factory overhead does not include the following:
Employee costs for those making the goods daily
External administrative overhead, such as a satellite office or human resources
Costs associated with C-suite employees
Expenses associated with sales and marketing - include pay, travel, and advertising
How to Calculate Overhead Costs in Manufacturing
To know the manufacturing overhead requires calculating the manufacturing overhead rate. The formula to calculate the manufacturing overhead rate i.e. MOR is basic yet vital.
To begin, determine your overall manufacturing overhead expenses. Then, add up all the monthly indirect expenditures that keep manufacturing running smoothly.
Then you can calculate the Manufacturing Overhead Rate (MOR). This statistic shows you your monthly overhead costs as a percentage.
To find this value, divide Total Manufacturing Overhead Cost (TMOC) by Total Monthly Sales (TMS) and multiply it by 100. The final formula will be:
Assume your manufacturing overhead expensesare $50,000 and your monthly sales are $300,000. You get.167 when you divide $50,000 by $300,000. Then increase that by 100 to get your monthly overhead rate of 16.7%.
This means your monthly overhead expenditures will be 16.7% of your monthly income. Being able to forecast and develop better solutions to decrease production overhead.
Five Ways to Reduce Manufacturing Overhead Costs
A variety of strategies may be used by manufacturing organizations to reduce their overhead costs. Here is a summary of some of the most important methods for reducing your manufacturing overhead costs.
Value Stream Mapping – A Production Plant Process Layout
A value stream map depicts the entire manufacturing process of your plant. Everything from raw material purchase through client delivery is detailed here. The value stream map provides you with a complete picture of the profit-making process. This overhead cost-cuttingmethod is listed first for a reason because every effort to reduce manufacturing overhead costsstarts with a value stream map.
Lean manufacturingis also one of the techniques of eliminating unnecessary time, staff, and work that is not necessary for profit and has gained undue favor in the manufacturing process. You must first create a value stream map of the whole manufacturing process for this technique to work. Once the lean manufacturing precept is established, the following strategies for decreasingmanufacturing overhead expenses can be examined.
Do Not Forget Your Back Office Management
Before focusing on factory floor cost reduction techniques, remember that your back offices, where payment processing and customer contacts occur, may also be simplified and increase profitability. Fortunately, automation can achieve this profitability at a cheap cost.
Manufacturers increasingly use robotic process automation (RPA) to sell directly to customers rather than rely on complex supply networks. This automation eliminates costly human mistakes in data input and payment processing by automatically filling forms with consumer data. Moreover, the time saved from manual data input (and rectifying inevitable human errors) equates to decreased labor expenses and downtime.
Automating Your Manufacturing Plant
For a long time, manufacturers saw factory automation as a game-changer. As a result, several plant owners make radical changes in their operations using cutting-edge technologydespite knowing it realistically. Over-investing in technologies unfamiliar to present industrial personnel might be deemed a technology blunder. Investing in new technology that doesn't generate value or is too hard for current staff to use might be a mistake.
It's usually best to start small when implementing newtechnology in manufacturing. Using collaborative robots in production is one way to get started with automation. They are inexpensive, need little software and hardware, and may help employees with mundane, repeated chores that gobble up bandwidth. It is a low-cost entry point into automation that saves labor expenses and opens the door for further automation investments when opportunities are available.
Reuse Other Factory Equipment and Supplies
Check with other factories to see if they have any unused equipment or supplies that may be "redeployed" to your manufacturing plant. Redeployment would save you time and money by eliminating the need to look for and install new equipment while lowering your overhead costs.
Outsourcing a fully equipped factory, equipment, or even staff can also assist in lowering overhead costssince you will only pay for what you utilize. As such, it is a viable method to incorporate into your production process.
Employ an In-house Maintenance Expert
An in-house repair technician can service your equipment for routine inspections, preventive maintenance, and minor repairs. This hiring decision might save money on unforeseen repair expenses or work fees for an outside repair provider. Having someone on-site who can do emergency repairs may save you money if your equipment breaks after business hours.
Manufacturing overhead costis an essential aspect of every manufacturing company's budget to consider. Smart manufacturingis intended to be productive, efficient, and cost-effective while effectively managing production expenditures. Calculating the manufacturing overheadcan provide you with a better understanding of your company's costs and how to minimize them. Depending on the conditions or geographical needs, each manufacturing plant's overhead expensesmay vary. As a result, identify your production overhead costsand concentrate on reducing and improving them.
What are manufacturing overheads?
Manufacturing overhead cost is a sum of all indirect expenses incurred during production. Manufacturing overhead expenses usually include depreciation of equipment, employee salaries, and power utilized to run the equipment.
What is a decent overhead percentage?
When a business is functioning successfully, an overhead ratio of less than 35 % is considered favorable.
How can I calculate the cost of manufacturing per unit?
The overall manufacturing cost per unit is determined by dividing the total production expenses by the total number of units produced for a particular time.
Article | January 4, 2022
Content marketing for manufacturers has become an essential component of every organization, and the manufacturing industry is no exception. Manufacturers are concentrating more on increasing their presence in both the digital and physical markets. As a result, the content market is seeing a boom as novel techniques are aimed at reaching the end objective of the manufacturing company.
According to PRNewswire, the worldwide content marketing industry is expected to increase by USD 417.85 billion between 2021 and 2025, at a CAGR of over 16%.
“Marketing is no longer about the stuff that you make, but about the stories you tell.”
– Seth Godin
Why Is Content Marketing Critical to Your Business's Success?
Helps in the formation of your brand's identity
Enables you to take advantage of organic search results
Performance is easy to assess
Produces leads and attracts ideal buyers
It balances the playing field, resulting in a higher ROI
It enables you to benefit from social shares
It entices visitors to return to your website on a regular basis
Manufacturing Content Marketing Strategies That Work
Recognize the Buyer's Pain Points
Writing amazing content requires knowing your target audience. Knowing your ideal customers helps you generate content that is relevant to them. When your potential buyer visits your website and finds content that answers his or her inquiries, you've already removed one hurdle for your sales staff.
How does your sales team define a good prospect?
Who are they?
What do they do?
Why are they visiting your business?
What is their industry knowledge?
The answers to all such questions influence what and how you write. Once you start recognizing your buyers, you can get the prospect and confidence in your organization to address your buyer’s difficulties.
Do Research on Keywords
Everyone appears to believe that skipping keyword research is acceptable. However, this is not the case. If you want to focus on marketing activities that yield big returns, you need a best manufacturer content marketing strategy backed by solid SEO.
Keyword research is the first step. Use one of the numerous internet keyword research tools to find terms with high search traffic, low competition, and relevance to your manufacturing company's activity. The better your keyword research, the better your content approach.
Create and Schedule Consistently Excellent Content
Writing outstanding content is by far the greatest strategy to increase your manufacturing company's SERP rank.
Hire a good content writer or content strategist who can combine your technical expertise, keywords, and purpose into a meaningful blog, case study, or content offer that gets results. Your material must be good to rank well.
Irregular content, like scattered production, always spells disaster. Having a defined timetable that your audience understands is essential to successful content marketing. Whether you produce material weekly, monthly, or quarterly, a timetable ensures that content is consistently released and updated.
Make Your Content More Visible
Once your content is ready, make your content visible to your target audience. Get your content marketing for manufacturing plan going to promote it in every way.
You're in a tough spot when it comes to content marketing for manufacturers. To stay ahead of the competition, you must constantly monitor the performance of your materials.
Keep an eye on everything you create and promote. Analyze which content form is performing well. Is it a blog? A time-lapse video? Or infographics? Identify your best-performing content so you can develop more of it.
Also focus on the content that doesn't perform well. Consider why that content didn't work for your audience. Is it too hard to rank that post? Is there a better platform or medium for the content? All of these queries must be answered to establish a strong content strategy for your company.
Optimize Your Content Marketing
The lack of industry-specific content marketing tactics is a major challenge for manufacturers. Many businesses use a generic strategy that ignores their particular customer connections, making different types of content marketing for manufacturers ineffective.
As the manufacturing business is a specialized business in any particular area, they also need specific content marketing strategies. Hence, focus on building a unique content marketing strategy that would help you optimize your business reach to your target audience.
General Electric Is Taking the Lead on Social Media
GE has come a long way from its 1892 beginnings. While it has retained basic product streams such as lighting, transportation, and power transmission, the goods themselves have developed dramatically. Social media marketing has become increasingly important as new technology transforms the corporate scene.
GE's Instagram Presence
GE's Instagram feed is an excellent illustration of widespread appeal. GE always shares attractive photographs with full explanations. It recognizes the power of pictures and captures common scenes in fascinating ways.
Utilizing cutting-edge content marketing methods for manufacturing businesses is critical for increasing your business's visibility and reach with your target audience. Ascertain that you select the appropriate techniques to advance your digital and physical presence in the industry. Discover the most effective plan for manufacturing content marketing and change your present marketing methods into more refined and up-to-date ones.
What are the best ways to market a manufacturing company?
The best approaches to advertising any manufacturing business are to concentrate on improving content, email marketing, SEO, press releases, and event sponsorship.
Is marketing vital for manufacturers?
Yes, since marketing opens up a whole new world for manufacturers, and a strong brand helps any business stand out from the competition.
Article | January 21, 2022
3D printing technology and its role in future manufacturing are grabbing the interest of industry experts. In terms of elevating future products, future additive manufacturing has a lot to offer the business. Additive manufacturing is developing and stretching its wings on a daily basis, becoming an integral part of every industry, including manufacturing, healthcare, education, and more.
In this article, we'll shed some light on the 3D printing future trends, which will assist the business in deepening its impact across industries. Furthermore, we will explore whether the additive manufacturing business is worth investing in as well as who the major players are that have already invested in the future of 3D printing.
Future Trends in the Additive Manufacturing Industry
Enhanced Machine Connectivity
Making AM solutions (including software and hardware) easier to integrate and connect to the factory floor is one of the key AM trends we predict to advance in the coming years. It has been a long time since the AM hardware market has been filled with closed, or proprietary, systems. These systems generally function with materials and software given or approved by the machine OEM and are not easily integrated with third-party alternatives.
Closed systems are important for process dependability, but they also restrict collaboration and connectivity. Companies expanding their AM operations will need to connect their machines and software to their production environments. When it comes to additive manufacturing, using siloed solutions is a surefire way to fail. Importantly, we see hardware manufacturers increasingly focusing on solutions that can be integrated with the production floor.
For example, a 3D printing market leader like Stratasys is a good illustration of the trend. In December, the business announced an extension of its previously closed machines' connection.Consumers may now integrate and control their additive production using software programs of their choosing, not just Stratasys' systems. For AM facilities, system connectivity is no longer an option. It's exciting to see the AM industry players recognize and solve this requirement.
AM and AI Continue to Converge
AM growth is incorporating AI and machine learning. AI can help with material development, machine setup, part design, and workflow automation. So, in the future, we anticipate seeing more AI and AM technology integration.
Combined with AM systems, AI will improve process control and accuracy. For example, Inkbit is currently working on an AI-powered polymer vision system. This technology can scan 3D printing layers and anticipate material behavior during printing.
Generative design, already generally recognized as a key digital advance in AM, may tremendously benefit from AI and machine learning.
It has so far been utilized to improve load routes when strength and stiffness are dominant. It can also be utilized to optimize thermal or vibration. AI and machine learning will advance generative design, allowing new concepts to be completely suited to AM.While we may be a few years away from fully developing the capacity to automatically adapt designs to process, we anticipate significant breakthroughs this year that will bring us closer.
AM Will Drive Decentralization
In order to future-proof their supply chains, many manufacturers are following new supply chain models and technology that allow them to cut prices or switch goods more easily. Increasing flexibility and agility will necessitate distributed, localized production, assisted by additive manufacturing.To reduce the number of steps required to manufacture complex metal or polymer structures, shorten lead times, and enable digital inventory management, digital inventory management can be automated. These advantages make it ideal for the distributed manufacturing model. We believe that in the near future, more businesses will actively explore distributed manufacturing with AM.
According to a recent HP survey, 59% of organizations are now considering hybrid models, while 52% are looking into localized digital manufacturing.
3D Printing Future: Major Predictions
In Jabil's 2021 3D printing trends survey of over 300 decision-makers, 62% of participants claim their organization is actively using additive manufacturing for production of their product components, up from 27% in 2017. Many such manufacturers are on the lookout for the latest additive manufacturing trends and forecasts. So let's begin.
Increasing Flexibility and Customization
Customized goods are a popular consumer trend, impacting several sectors. Rather than buying a mass-produced item, customers are increasingly demanding a custom-made item that meets their specific needs.
Additive manufacturing's low-volume production capabilities simply enable personalization and customization.
3D printing allows for more responsive design options, particularly for additive manufacturing. Manufacturers can afford to make smaller batches, allowing designers and engineers to alter product ideas and develop them cost-effectively when inspiration strikes, the public mood is understood, or customer feedback drops in.
Materials Drive the Future of Digital
As the additive manufacturing ecosystem grows, the importance of materials cannot be overstated. Besides high equipment costs, materials and limited additive manufacturing ecosystems have hindered the 3D printing industry's growth. The market is flooded with 3D printing materials, but few are advanced enough to fulfill industry standards.Due to volume constraints in most sectors, suppliers and manufacturers aren't motivated to develop innovative materials for new uses. However, the future of 3D printing is in engineered and application-specific materials.
Various sectors have unique difficulties that demand unique solutions. New designed materials will revolutionize new uses, including highly regulated sectors. Industries will reward those who can promptly introduce 3D printing materials adapted to specific industrial and engineering needs. This will allow more 3D printing applications to be supplied and the whole digital manufacturing flywheel to start spinning.
3D Printing and a Sustainable Future
Finally, additive manufacturing promotes sustainability and conservation. Besides decreasing trash, 3D printing saves energy. The Metal Powder Industries Federation studied the difference between making truck gear using subtractive manufacturing (17 steps) and additive manufacturing (6 steps).
3D printing uses less than half the energy it takes to produce the same product. 3D printing also reduces the need for moving products and materials, reducing the amount of carbon emitted into the environment. So we can see that digital and additive solutions already contribute to a more sustainable future.
Is Investment in the Future of Additive Manufacturing Worth It?
In recent years, there has been an explosion of investment in industrial 3D printing. Hundreds of millions of dollars have flowed into the industry in recent years, assisting new businesses. Desktop Metal ($160 million), Markforged ($82 million), and 3D Hubs ($18 million) have all received significant funding in the past. According to a recent report and data analysis, the global additive manufacturing market will hit USD 26.68 billion by 2027. A rising level of government support for additive manufacturing across regions is driving market demand.
For example, America Makes, the foremost national initiative in the US since 2012 dedicated to additive manufacturing (3D printing future technology), received USD 90 million in support from the government, commercial, and non-profit sectors. Given the industry's expenditures and the expanding need for 3D printing, investing in the additive manufacturing industry or 3D printing is certainly encouraged.
Additive manufacturing is being used in practically every industry, and companies are researching how technology might be used in their specific fields. The numerous advantages and sustainability that 3D printing provides are the major benefits that manufacturers and other industry professionals notice with 3D printing.Future manufacturing will be significantly more accurate and simple to run thanks to 3D printing technologies. Considering the trends and projections listed above, you may have a better understanding of 3D printing's future and make an informed investment decision.
What is the future of 3D printing?
3D printing, or additive manufacturing, has the potential to empower everything from food to coral reefs. 3D printers may soon be seen in homes, companies, disaster zones, and perhaps even outer space.
Why is 3D printing important to society?
3D printing results in waste reduction and so eliminates the need for periodic waste reduction, reuse, and recycling. So it helps society with no carbon footprint.
Why is it known as additive manufacturing?
The term "additive manufacturing" refers to the fact that the building process adds layers rather than removes raw materials.
Article | December 8, 2021
An agile manufacturing strategy is one that places a strong priority on responding quickly to the needs of the customer, resulting in a major competitive advantage.
It is a captivating method to build a competitive work system in today's fast-moving marketplace. An agile organization must be able to adapt quickly to take advantage of limited opportunities and rapid shifts as per client demand. Agile manufacturing is gaining favor among manufacturers due to its several benefits, including increased work productivity and good control over the final deliverable. Furthermore, the shorter time to market is expanding the global market for enterprise agile transformation services.
According to Market Watch, with a CAGR of 17.9% from 2019 to 2026, the US enterprise agile transformation services market is predicted to reach $18,189.32 million by 2026.
So why is agile manufacturing gaining traction? What challenges do manufacturers encounter when implementing agile manufacturing, and how have industry leaders like GE, Adobe, and Accenture effectively implemented agile methodology in their organizations and become the best examples of agile manufacturing? In this article, we'll take a closer look at each point.
What Is the Importance of Agile Manufacturing?
The term "agile manufacturing" refers to the use of a variety of different technologies and methodologies in the production process. In order to meet market standards and criteria, organizations must be able to adapt quickly and effectively to their customers' needs by bringing agility to manufacturing. To ensure the quality of products and the cost of production are kept to a minimum, agile manufacturing helps firms to regulate their end product.
Because it immediately addresses the needs and worries of the clients, it is an effective strategy as well. By using this method, firms may better understand the market and use it to their advantage by creating products that meet the needs of their customers.
Challenges While Adopting Agile Methodologies on a Project
When we talk about agile challenges when implementing it on any project, some will be routine and some will be unique. So, let's get a quick grasp on the agile challenges.
Communication about the project: Clear communication between the development team and the product owner is critical throughout the project development life cycle. Any miscommunication can have an impact on the product's quality and the end result of the entire process.
Managing the day-to-day operational challenges: Throughout the project, daily minor or large operations play a significant impact on the overall project output. Any obstacles encountered when working on everyday chores should be resolved immediately to avoid any delays or halts in the process.
To make it function, you'll need experience: Any inexperienced product owners, scrum masters, or individuals new to the agile approach may have a negative impact on the project's expected output.
Various project contributors' buy-in: Inadequate training, a lack of motivation to show up from project participants, keeping customers in the loop, and a lack of departmental management are some of the problems that may hinder the accurate implementation of the agile methodology. The presence of one or more of these obstacles in any business or project may jeopardize the agile methodology and its total output.
Though there are many online training courses and books available on how to integrate agile practices into your project, each organization's scenario is unique, as are the challenges they encounter. As a result, handling the situation with experienced personnel that have a can-do attitude is what is required to make it work.
Following that, we'll look at some manufacturing business agile examples and how they've successfully implemented agile methodology in their organizations.
Agile Manufacturing Examples
We'll look at one of the most well-known industrial examples of agile manufacturing that has successfully implemented the methodology and achieved great outcomes. Take a peek at it.
One of the most popular agile manufacturing examples in performance management revamps is Adobe. When Donna Morris was Senior Vice President of People Resources in 2012, she thought the annual performance evaluation and the stack-ranking process were bureaucratic, paperwork-heavy overly complicated, taking up too many management hours for the company. Aside from this, she discovered that it set barriers to joint efforts, creativity, and development.
The Adobe team ditched annual performance reviews and encouraged managers and employees to regularly discuss performance via a system called “Check-in.” Adobe has reduced voluntary turnover by 30% and increased voluntary departures by 50% since making the transition. Moreover, the company saved 80,000 management hours annually.
General Electric famously overhauled its performance management system in 2015, paving the path for other global firms to follow in the electronics industry. Annual performance evaluations and the infamous rank-and-yank performance rating system (ranking employees and regularly eliminating the bottom 10%) had GE decide they needed to update their performance management system. The annual appraisals lasted a decade longer than the ranking system. They are now a more agile organization.
Instead of directing employees to attain goals, managers now guide and coach them. GE also decided to deploy an app they designed called PD@GE to facilitate regular employee feedback and productive performance discussions.
Using the app, each employee establishes priorities and solicits feedback. They can also give real-time feedback. Employees can request a face-to-face meeting at any time to discuss transparency, honesty, and continuous improvement.
These traits will not arise quickly and will require motivation and commitment for self-growth.
According to Accenture's previous system, employees who perform well tend to be the most narcissists and self-promoters. Accenture wanted to revamp their system and reward genuine employees. So they started using on-going performance conversations while focusing on performance development.
Because it required employees to compete with coworkers who may have had a different position, Accenture decided that forced ranking was illogical. The new system is more centered on the employee and aims to assist them in becoming the best version of themselves.
Agile manufacturing is a way to get the finest results and exceed client expectations on every project. Businesses are benefiting from agile manufacturing because it improves the end product and helps them better utilize their resources. The necessity of agile manufacturing in business is vital, and organizations must overcome the challenges they encounter while applying the agile approach to any of their projects in order to reap the benefits of agile production.
How does agile manufacturing help businesses?
An agile manufacturing process enables organizations to respond to client requests with flexibility when market conditions change, as well as regulate their intended production while preserving product quality and minimizing costs.
What is an agile organization?
Unified alignment, accountability, specialization, transparency, and cooperation are key elements in an agile organization. To guarantee these teams can work efficiently, the organization must maintain a solid environment.
What are the core elements of agility?
Individuals and interactions over processes and tools are the four values of the Agile Methodology. A working program is preferable to in-depth documentation. During contract negotiation, the customer's cooperation is valued.
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