Squeezed for Margin: Small Manufacturers Stop Leaving Money on the Table

Price optimization technology for large manufacturing operations costs from $120K - $1.5M per year. For multi-location, global, and publicly traded companies this is an expense easily cost-justified. A small 1% in margin preservation is worth thousands of times the expense of price optimization technology.

The manufacturing industry drives innovation in America. It is the birthplace of products and processes that make the world a better place. ManufacturingPower uses lean manufacturing principles by eliminating waste around industrial supply spend with market comparison and analysis. Based in lean principles there is an on-demand implementation process driving an immediate ROI and elimination of waste.

Surviving the margin squeeze
Small and midsize manufacturers report the biggest 2020 challenges are price-cut mandates and online reverse auctions which compromise quality and endanger the business. Supporters of the practices say the strongest suppliers will survive, making supply chains more efficient. When operating margins are already thin, a rigorous and continuous process improvement mandates on-going SKU pricing evaluations for every element in the manufacturing operation.

Unsurprisingly, there has been a shift in manufacturing business process in practically every American industrial setting. The lean thinking paradigm now includes purchasing and supply chain functions.

With access to unlimited “Part Number Matches” per year, even the smallest manufacturers realize significant savings, capture lost margin, and view costs versus peer market pricing. Insight to suppliers with the lowest costs, viewing potential savings, and tracking year-to-date savings, prove the efficacy of these new technologies.

PowerPotential Report: Step One
Until now the price tag for immediately accessible comparative pricing has been too expensive for most of the 89% of small to mid-sized U.S. manufacturers with fewer than 50 employees). 2020 introduces a new affordable solution which provides access to pricing optimization with the ability to evaluate systematically. This new technology solution is priced at less than $5,000 per year. 

ManufacturingPower suggests that small manufacturers start with a free PowerPotential Report which includes easy data uploads, CSV and XLS file formatting, and insight into top six savings opportunities. Within 24 hours, this powerful data demonstrates where even the smallest manufacturers can start realizing significant savings with access and transparency to data.
Squeezed for Margin: Small Manufacturers Stop Leaving Money on the Table
© 2020 ManufacturingPower


Currently, manufacturers are spending far more than needed on tooling, fasteners, clean room supplies, packaging, and any line item in the supply chain. Originally, this cloud-based low-cost solution started as a software tool allowing manufacturers to anonymously share data and compare pricing. Through a network of data, this proprietary method saves manufacturing enterprises across their total industrial supply spend.

Watch this brief informative video.

2020 still has tariff ambiguity in the market. Manufacturers, relying on forward-looking predictive models to set prices, are able to identify and reduce wasteful pricing processes while reducing over-discounting.  Poor pricing methods effectively transfer the incremental profits from lean activities away from the company and into the pockets of customers.
Now that there is an affordable pricing optimization solution for small and midsized manufacturers applying lean principles to pricing process is immediately accessible.

Lower cost materials available
Instead of simply ordering from Grainger or other distributors out of habit, it would be nice to know if the price offered is the best price or even at market price by geo-location! The data are collected and shared by ManufacturingPower daily.
Products can be manufactured utilizing a variety of different materials, depending on marketplace requirements and the practices of the manufacturers.
When considering a change in the materials used, the manufacturing method may be impacted by increasing cycle times or labor costs. Changing the composition of a product may be worthwhile, even when the material costs are higher due to a simplified production process.
To continually order from the same vendors and suppliers without a price comparison is simply not effective. Larger manufacturers may be able to absorb a 2% margin loss; this kind of loss could shut the doors of a smaller manufacturer. Technology is constantly improving; prices move up and down due to market fluctuation as well as supply and demand constraints. No longer will small manufacturers leave money on the table.
About The Author
Mike Franz is the founder and creator of the WorkCenter from ManufacturingPower, a cloud-based market intelligence solution designed to help small to mid-sized companies streamline and achieve real-time visibility into Industrial Supply spend, collaborate better with suppliers, mitigate risk, and realize significant cost savings.

Spotlight

Michelin

Michelin, the leading tire company, is dedicated to sustainably improving the mobility of goods and people by manufacturing and marketing tires and services for every type of vehicle, including airplanes, automobiles, bicycles/motorcycles, earthmovers, farm equipment and trucks. It also offers digital mobility support services and publishes travel guides, hotel and restaurant guides, maps and road atlases.

SPOTLIGHT

ManufacturingPower was founded after realizing that the manufacturing industry currently has no way of objectively comparing prices for industrial supplies. Since the company was founded, it has grown to include a team that collectively has more than 100 years of manufacturing and industrial supplies experience, and more than 60 years of supply chain experience. This powerful group is committed to helping manufacturers cut wasteful spending so that businesses and their teams can get back to what matters most: driving economic growth, innovation and success.

OTHER ARTICLES

5 Marketing Myths Manufacturers Often Get Mistaken About

Article | February 22, 2021

The manufacturing industry has struggled in the past few decades due to being affected by a down economy. The competition was high as developing economies entered the landscape of international markets. As a marketer, there are always new mediums to drive business growth. Whether it is current advertising trends or content best practices, you need to stay updated. It is because the risk of missing out on valuable opportunities can take your business far behind. In this struggle, you are not alone. A lot of manufacturers are often mistaken about some common marketing myths in manufacturing that affect their business. As per a recent research by Accenture, 90% of CEOs and CMOs anticipate that the role of marketers is changing. 75% of CMOs believe that past strategies will not be as effective as new strategies to reach customers. Other reports mention that 65% of manufacturers believe that they are behind their competitors in the digital arena. Yet, they are willing to put more dollars and are eager to enter the digital landscape of marketing. Still, many of them are dealing with some common marketing myths in manufacturing. Time to debunk the marketing myths in manufacturing! Myth No. 1: Manufacturing Still Uses Obsolete Processes The manufacturing industry was believed to rely on obsolete and legacy processes and that undergoing a digital transformation would be too costly. In fact, the traditional processes cost more money to maintain. Even though online digital marketing is becoming widely known, some skeptics still think it is just a myth. What Is the Fact? As the manufacturing industry is adopting innovative solutions, many manufacturers have inculcated online processes and streamlined all to improve efficiency and output in the digital marketing landscape. Shifting to cloud technology will no longer require housing hardware or hiring full-time staff to manage the operations. With cloud solutions, updates are conducted automatically. Myth No. 2: Buying Costly Technology for Marketing Automation Would Boost Revenue Costly, technologically verified marketing tools do not automatically add to your marketing and sales leads database, nor will they automatically generate quality sales leads. Here are some common mistakes manufacturing marketers make when they consider implementing costly technology for marketing purpose: • They do not understand the need for marketing automation If there is no plan or strategy to use the tool, there’s less chance of generating quality sales leads. • Failing to check the marketing process If you haven't prepped your team to align with your current marketing strategy, then automation won't help. • Generally, forget that content is king If your content doesn’t engage your audience, your marketing strategy won’t give the desired/necessary results. 2.1 What Is the Fact? Marketing automation tools such as HubSpot, Marketo, and others can serve as real digital marketing platforms. Whether it is for email management, blogging, or social media posting, marketing automation helps keep a check on the overall digital marketing performance. Therefore, there is no need to install costly digital marketing solutions but the right one. Getting the right tool can stop the common errors and help your business drive growth like never before. Myth No. 3: Every Lead Is Equally Important When the business is new, it's exciting to see interested buyers knocking on your door to buy your product/service. But leads that aren’t genuinely interested can waste your valuable time. This is why most manufacturing marketers get struck by the most common marketing myth—every lead is equally important. What Is the Fact? Instead of spending time fostering every lead through the pipeline, focus on your ideal customer. This will only bring the right customers in from the beginning. So, do you want to know who that right target audience can be? For this, create multiple defined personas based on your best customers to identify clients' characteristics, traits, and thoughts. Then, put those characteristics to work in your marketing material. Communicate directly to those who you think can be a good client fit. This way, you will be able to qualify quality leads at the beginning. This will further help your marketing team to pitch more as your company grows and matures. Myth No. 4: It’s Hard to Determine the ROI Somewhere along the way, this marketing myth in manufacturing was created. Fortunately, it couldn’t be more wrong. What Is the Fact? Implementing the right marketing automation platform can easily track prospects from their initial interaction to a sale. According to a report, marketers saw a higher ROI in 2019. It was due to online marketing. They reportedly used marketing automation software. Marketing software allows you to effortlessly check analytics. It allows keeping a watch on what is working and what is not. In the same year, marketing survey teams checked marketing metrics three or more times a week. The result they saw was likely to see an increased ROI of over 20%. This way, this marketing myth has been put to rest. The truth is digital marketing can generate a determinable revenue for the future. Myth No. 5: B2B Manufacturers Do Not Target Social Media Channels This marketing myth existed for a long time in manufacturing. But the fact is social media is a powerful tool to expand a company’s online presence. As per a recent IEEE GlobalSpec survey, over 1,400 industrial engineers and technical professionals regularly visited social media sites. They searched for industry news, product reviews, and expert advice. Almost 60 percent of them reported using YouTube or other video-sharing sites to get more industry-related information. What Is the Fact? Not surprisingly, the same survey found other industrial millennials who were more likely to use social media, especially Facebook and Twitter. In fact, many existing industrial businesses, across all age demographics today, prefer LinkedIn and Facebook platforms the most. The above statistics show that you can't overlook social media platforms when inculcating digital marketing strategies into your business. A YouTube video is an excellent medium for demonstrating a new assembly line capability or sharing any recent manufacturing innovation. Well-researched posts on LinkedIn, Facebook, or Twitter can even build industrial credibility and demonstrate manufacturing expertise. But, how you decide what to post on social media platforms is the kicker. Whether your post matters to those you are trying to approach should be the primary concern. This way, social media can be a boon. And it has, to a great extent, broken this marketing myth in manufacturing. Using social media channels, you can easily and rapidly get a stream of traffic to your website to stand out from the competition. Thinking of social media as a sales tool won’t benefit you. Instead, considering it as a mechanism to add value to your existing customer base and keep them coming back for more will benefit your company the most. Debunking these marketing myths in manufacturing is the start when you are heading to build a marketing team. Or to incur the best digital marketing strategies. So, breaking these myths will offer insights and knowledge about your digital marketing performance. Having a structured and tangible plan will turn that knowledge into fruition. 6 Frequently Asked Questions What is the most common myth in the manufacturing industry? The most common marketing myth in the manufacturing industry is that workers aren’t compensated well. This myth has been debunked. Research says that hourly income has risen 17% higher than other industries. What is the most common technology in the manufacturing industry? 3-D printing is the most common technology in the manufacturing industry. It is used in many manufacturing projects at an initial stage as well as to the final ones to create advanced requirements. Does costly marketing technology raise sales in manufacturing? Not necessarily. But using the right marketing technology can raise sales in the manufacturing industry faster. { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [{ "@type": "Question", "name": "What is the most common myth in the manufacturing industry?", "acceptedAnswer": { "@type": "Answer", "text": "The most common marketing myth in the manufacturing industry is that workers aren’t compensated well. This myth has been debunked. Research says that hourly income has risen 17% higher than other industries." } },{ "@type": "Question", "name": "What is the most common technology in the manufacturing industry?", "acceptedAnswer": { "@type": "Answer", "text": "3-D printing is the most common technology in the manufacturing industry. It is used in many manufacturing projects at an initial stage as well as to the final ones to create advanced requirements." } },{ "@type": "Question", "name": "Does costly marketing technology raise sales in manufacturing?", "acceptedAnswer": { "@type": "Answer", "text": "Not necessarily. But using the right marketing technology can raise sales in the manufacturing industry faster." } }] }

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4 Ways Additive Manufacturing Will Optimize Electronics

Article | May 25, 2021

Additive manufacturing offers the potential to accelerate the pace of electronics manufacturing by creating a number of unique opportunities, such as the ability to combine multiple materials in single print jobs. The technology is also much more accessible than it previously was. Plus, it enables faster prototyping, which could speed the time to market and prevent costly mishaps that disrupt the production process. Here’s a look at some of the many benefits additive manufacturing brings to the electronics sector. One Giant Leap Adoption rates for electronics made with additive manufacturing will continue to climb as people realize its versatility. Thanks to a new project associated with students at Embry-Riddle Aeronautical University, we could see materials made with additive manufacturing are as well-suited for use in space as on Earth.

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Connected packaging: A new era of smart products

Article | January 19, 2021

These days, smart can be added to the front of just about everything. And unsurprisingly, packaging is no different. Being influenced by digital transformation, smart packaging is a way for brands to connect their online and offline offerings. And as ecommerce sales continue to rise, Robert Lockyer, CEO and founder of Delta Global, a packaging solutions provider for luxury retailers such as Coach and Tom Ford, believes the smart trend in packaging will too. In this piece, Robert shares his predictions on how the new era of smart packaging and consequently, products, will connect, improve and transform industries and shape new consumer expectations. Smart packaging refers to a container or outer shell of a product that has extended functions. Now, the concept is nothing new as these functions are often the reason specific materials are chosen for use in the packaging of certain products. For instance, in the food market, it’s common to find fresh produce wrapped in film with ethylene absorbers in order to lengthen shelf life. Or, for bottles to be fitted with oxygen absorbing caps to keep drinks fresher for longer. But typically, in other FMCG markets, packaging has largely remained disconnected from the product it is containing. Packaging is merely seen as a means for transportation or a protective outer layer. However, we are seeing a shift in perception. Increasingly, brands are investing in the smart functions of their packaging in order to add value to their products. And consumers are beginning to expect such things from brands as a result. Consumer benefits of smart packaging As the trend prevails, there are a number of reasons why brands should consider introducing smart packaging to their product offering. The most significant of these being the ability to improve the overall customer experience of shopping from your brand and encouraging greater customer engagement. Although in traditional retail customers are presented with various physical touchpoints before making a purchasing decision, ecommerce is different. Unless a customer has visited a store first, which is unlikely at present due to COVID-19 restrictions, the package is often the first physical point of contact a customer has with a brand. Therefore, from the moment the package is delivered, before it is even opened, it needs to make an impression on your customer. An impression that reflects your brand and the intended customer experience. This way, consumers will already have positive perceptions of your business, encouraging a better reception of your products, greater overall engagement and a higher likelihood of a repeat purchase in order to go through the whole experience again. And smart packaging is a way for brands to do exactly that. Packages can offer customers additional benefits and an improved customer experience by integrating within them various technologies and features. Face value features may include illuminations, sounds, and aromas, enticing customers by appealing to their sensory needs. But other smart technology integration can be much less obvious, yet equally as advantageous. For instance, through use of connectivity and augmentation features, whether that be scannable QR codes, sensors or microchips, this can be used to improve communication with customers and the functionality and use of the product. By scanning a QR placed on the outside of a box or bag with a smartphone for example, customers can be provided with more information on the product inside, including details of ingredients, origins and production. QR’s can also provide other marketing content such as competitions, product recommendations through digital discovery channels and the offering of virtual brand experiences. Or, if the package itself is not “smart” in function, perhaps brands can look at using customer data and insights to inform designs and even tailor the outer materials to the needs of individual customers or groups, making them smart in design instead. Either way, smart packaging is becoming a way for brands to differentiate themselves from competitors by improving customer interactions and supplementing their product offering with additional features and benefits and overall, creating a more favourable customer experience. Commercial value of smart packaging However, smart packaging isn’t just about giving your customers more. Rather, there are many benefits for the business, too. Ultimately, there are advantages for connectivity and transparency in the supply chain as well as on the customer facing front. And of course, this is exactly what is offered with smart packaging. Through the inclusion of chips and systems, such as radio frequency identification (RFID) which identify packages wirelessly, tedious processes involved with scanning at various logistic points can be removed, making the entire process from order to delivery much more efficient. Naturally, this would reduce administrative tasks as well as costs for the business due to a much more streamlined chain. For more sensitive items, particularly in food or even in the health and beauty industry, temperature can also be both managed and monitored through smart packaging. Readings can then easily be displayed on packages, giving both the brand and customer assurance that the items inside have not been breached and remain compliant and safe to use. Consequently, smart packaging is on track to transform industries by offering both brands and consumers new ways to deliver and use products. Although barriers do exist at present, namely the costs related to manufacturing, it will be interesting to see how more and more brands begin to innovate and integrate smart technologies to more than just their products.

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Private 5G Networks and the Future of Industry 4.0

Article | February 18, 2020

Modernizing an industrial operation to support Industry 4.0 applications can be a remarkably complex challenge. This is especially true where a facility uses legacy fixed Ethernet to connect machines to a central office location. Transition may be easier where a facility has already transitioned to wireless, but evolving to next-generation capabilities can expose the limits of commercially-supplied Wi-Fi and LTE cellular networks. That’s because Industry 4.0 makes use of highly automated, intelligent, and collaborative cyber-physical systems which require highly stable, low-latency wireless connections.

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SPOTLIGHT

ManufacturingPower was founded after realizing that the manufacturing industry currently has no way of objectively comparing prices for industrial supplies. Since the company was founded, it has grown to include a team that collectively has more than 100 years of manufacturing and industrial supplies experience, and more than 60 years of supply chain experience. This powerful group is committed to helping manufacturers cut wasteful spending so that businesses and their teams can get back to what matters most: driving economic growth, innovation and success.

Spotlight

Michelin

Michelin, the leading tire company, is dedicated to sustainably improving the mobility of goods and people by manufacturing and marketing tires and services for every type of vehicle, including airplanes, automobiles, bicycles/motorcycles, earthmovers, farm equipment and trucks. It also offers digital mobility support services and publishes travel guides, hotel and restaurant guides, maps and road atlases.

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