Combatting rising costs by optimising operational efficiency
James Robinson, SYSPRO Head of Services Asia Pacific.
Over the past five years, the manufacturing sector has demonstrated remarkable resilience, enduring many different challenges. Today, manufacturers face a renewed and formidable challenge with unexpected higher inflation raising the risk of yet another rate hike, threatening to destabilise the core economics of manufacturing businesses across Australia and the Asia Pacific region.
The challenging economy has dominated the news for over two years, placing the manufacturing industry in the spotlight as it grapples with the challenges it presents.
SYSPRO’s recent Global CFO Manufacturing Survey showed that over 80 per cent of respondents across the Asia Pacific region cited high inflation and interest rates as a cause of drag in the manufacturing industry.
Meanwhile, 67 per cent of companies surveyed have been buffeted by economic uncertainty and supply chain disruptions. Yet, as history has shown, within every challenge the manufacturing sector has faced lies an opportunity for innovation and efficiency improvements.
Strategies for optimising operational efficiency
To counteract the effects of rising costs, manufacturers need to optimise their operational efficiency. Integrating their ERP (Enterprise Resource Planning) and MOM (Manufacturing Operations Management) systems can be a game-changer in achieving this goal. Here are several strategies for manufacturers to consider:
- Invest in technology and automation
Embracing advanced technologies and automation is essential for the manufacturing sector. Innovations like ERP and MOM systems can significantly enhance operational efficiency by reducing reliance on manual labour, minimising errors and centralising information.
Together with advanced technologies like the Internet of Things (IoT), artificial intelligence (AI), and machine learning, provide real-time data and insights, enabling informed decision-making and improved productivity.
- Optimise supply chain management
Efficient supply chain management is crucial for minimising costs and ensuring a steady flow of materials. ERP systems help manufacturers enhance supply chain efficiency by diversifying their supplier base, leveraging digital supply chain solutions and improving inventory and warehouse management.
Building relationships with suppliers and exploring local sourcing options can also reduce reliance on international suppliers and mitigate the impact of future global disruptions.
- Implement lean manufacturing principles
Lean manufacturing principles focus on eliminating waste and optimising processes. With the support of ERP and MOM systems, manufacturers can enhance productivity and reduce costs by streamlining operations, reducing unnecessary steps and improving workflow.
- Invest in workforce training and development
A skilled and motivated workforce is essential for operational efficiency. Manufacturers should invest in training programs to enhance employee skills and knowledge.
ERP systems facilitate the cross-training of employees, improving flexibility and reducing downtime on the production line. Additionally, encouraging a culture of continuous improvement and employee engagement can drive innovation and productivity.
- Implement predictive maintenance
Unplanned downtime and equipment failures can be costly. Implementing predictive maintenance strategies through MOM systems helps identify potential issues before they lead to breakdowns.
By leveraging data analytics and IoT sensors, manufacturers can monitor equipment health, schedule maintenance proactively and minimise downtime, ultimately reducing costs and improving efficiency.
- Optimise production planning and scheduling
Effective production planning and scheduling help maximise resource utilisation and minimise idle time. ERP and MOM systems enable manufacturers to implement advanced planning and scheduling (APS) systems, optimising production processes, efficiently allocating resources and reducing lead times.
This ensures smooth production runs, reduces bottlenecks and improves overall efficiency.
- Adopt sustainable practices
Sustainability is not only beneficial for the environment, but it also enhances operational efficiency. Implementing sustainable waste reduction, recycling and eco-friendly packaging can reduce costs and improve brand reputation.
ERP systems support sustainable sourcing practices, ensuring a stable supply of raw materials and mitigating the impact of price fluctuations and global supply chain disruptions.
Conclusion
The manufacturing industry has faced numerous challenges in recent years, and the current inflationary pressures and rising interest rates are no exception.
However, manufacturers can counteract these rising costs by optimising their operational efficiency through the adoption of advanced technology.
Investing in ERP and MOM solutions is crucial in times of economic uncertainty. These systems help manufacturers survive and thrive in the face of rising costs by enhancing operational efficiency and turning challenges into opportunities for growth and innovation. The resilience and adaptability that have defined the manufacturing industry for decades will continue to drive its success in the future.
