The Four Biggest Challenges for Job Shops
Sep 20, 2017
By: Mark Stevens
Day-to-day operations in job shops and contract manufacturing facilities can be difficult, even on a good day. Hurdles—big and small—seem to be around every corner, making it nearly impossible to consistently meet customer demands, deadlines, and budgets. Some of these challenges are common yet relatively easy to avoid. Here’s a look at what a majority of job shops and contract manufacturers are dealing with every day, and some simple tools to help fix what’s broken.
1. Keeping the Customer Pipeline Filled
Challenge: Most job shop owners didn’t get into the business so they could function as the company’s sales person, but many do. Soon these owners find that sales is a full-time job. Customers can be very loyal, but it’s just as likely they may leave for some reason: they shop on price and go to a competitor who’s undercut you, they stop making a specific product and no longer need the part you make, they go out of business...there are plenty of reasons you’ll need to replace a customer. Keeping your pipeline filled with quality prospects is critical to long-term success, but how do you do that
Solution: What do you do better than any of your competitors? Does the part you make for Customer A last longer than others’? Do you offer a service that simplifies ordering or offers customization? Do you have better on-time delivery rates? If you can pinpoint and clearly communicate the reason to partner with you, you have a better chance of maintaining customers. It’s important that whatever it is you say you do better is aligned with what customers want and need. If you offer kitting, but customers see little value in that feature, it’s not something you want to hang your hat on.
To understand what’s important to customers, do a simple online or in-person survey; ask why they currently work with you (you may be surprised by their answers), what you could be doing better, and what they feel is the most important factor in vendor selection. Keeping a steady stream of good prospects in your pipeline certainly is more complex than just aligning with needs, but that’s the heart of it: know your organization’s strengths, know your prospects and customers inside and out, and give them what they need. Be ready to shake things up a bit if you’re not fully aligned; complacency rarely results in new customers.
2. Maintaining a Schedule Amidst Customer Changes
Challenge: How do you react when production’s going along smoothly, then out of the blue a customer calls, asking for a design change, a revised deadline, or some other “wrench in the works” request? Customers expect you to be agile, but putting out fires like this wastes considerable time and money. But you can’t say no...so what do you do?
Solution: An Enterprise Resource Planning (ERP) solution integrates data from every corner of the job shop—sales, marketing, production, distribution, customer service, accounting, HR—and informs every relevant area when a glitch in the schedule occurs. Let’s say a customer needs to move the delivery date up by a week; once that information is put into the system, production queues are modified to accommodate the request; distribution is alerted that its delivery will be moved, accounting sees that invoicing will go out later (and payment received later), and HR knows that if this change requires OT, payroll will change. One platform that integrates and manages operations allows you to turn on a dime, without losing time or money.
Challenge: Many job shops haven’t updated their accounting systems and are suffocating under the weight of multiple software programs, cumbersome Excel spreadsheets, error-prone paper invoices and orders, and other tools. This approach is prone to costly errors and tends to extend your order-to-cash process; you could be leaving money on the table if your invoices are incorrect, and certainly you’re not getting paid as quickly as you could be.
Solution: When you’ve got a cloud-based ERP solution, all your accounting and financial information is in one spot, not only drastically reducing the time it takes to close your books each month, but speeding your order-to-cash cycle (one report shows you could contract the time between order and payment by 50 percent). No job shop can afford to have a sluggish cash flow affecting its ability to purchase new equipment or honor its day-to-day obligations.
4. Quoting and Estimating
Challenge: One of the reasons you’re not closing more quotes could be that they aren’t correct—or created on time. Sometimes salespeople cushion a quote because a number of factors that go into producing a product are tough to pinpoint, like transportation and labor; customers balk at what they see as an inflated price and the salesperson must go “sharpen the pencil.” It could be, too, that the salesperson avoids doing quotes because the process is so time-consuming, leaving the customer to wonder why he doesn’t want their business.
Solution: To close more business, your quotes have to be accurate and issued quickly. An ERP system gives you a 360-degree view of all the costs that go into a project, minimizing the chance of incorrect estimates, wasted time, and loss of revenue. An ERP solution also provides the insights needed to understand why you’re not closing more business. You’ll know if customers order once but never return, if products were returned as damaged or flawed, if customer service had complaints or unresolved issues with a customer, and more. With this information you’re able to quickly take corrective action and improve overall customer satisfaction.
These problems may be common, but they’re some of the most detrimental if not fixed. Fortunately, technology allows job shops and contract manufacturers to get the same enterprise-level insights large manufacturers use to guide their decisions. Knowledge is power, and the knowledge provided by real-time visibility into all facets of your organization give you the power to become highly efficient, streamline your processes, improve accuracy of nearly everything you do, and give your customers reasons to be loyal.
Wipfli’s manufacturing team has deep experience with manufacturing operations of all sizes. We’re well equipped to pinpoint problem areas and identify the most practical, cost-effective solutions to help you grow. Why not reach out for a brief introduction to our Total Solution for Job Shops?