How to Improve Effectiveness in Manufacturing Companies

Welder at work.

Worrying about manufacturing effectiveness is different from worrying about manufacturing efficiency. The latter deals with getting more for less (and is purely quantitative), while the former is about long term planning and structural changes (and is greatly qualitative). Effectiveness is a broader term than efficiency. Effectiveness is about getting the right information, establishing connections and hiring the right people at the right time. Regardless of the manufacturing specialty, lots of new ideas and institutions are out there to help remove risk and boost production, speed and growth.

Instructions

1. Adopt lean production techniques. The Toyota Corporation did well in developing this central manufacturing idea. Lean production is about removing all activity in the workplace that has nothing to do with value-added work. Examples are reducing storage and inventory to a minimum, delivering products for manufacturing precisely when needed, buying raw materials on the day of production, and shipping finished product immediately when demanded. The essential ingredient is timing; the manufacturing process is considered one long procedure, one long action. This effectiveness change requires a long-term commitment.

2. Hire a merchant bank to direct investment and generate new ideas. One major problem in manufacturing effectiveness is ignorance of capital, technology and partnership sources. A merchant bank can help with this. The beauty of merchant banking is that, for a fee, an investment broker can link a manufacturing enterprise with new sources of funds, customers, partners and technology leaders otherwise outside of the day-to-day vision of the enterprise. Hiring a merchant bank permits a specialist in your area of manufacturing to then become financially connected to your enterprise.

3. Look around for a good export credit insurance plan either from government or private providers. If the enterprise ships abroad, this is indispensable. Even if the manufacturing enterprise has not considered going global, export credit insurance can make this transition easy. The concept here is that this insurance covers international customers in the event that they default or otherwise cannot pay. This makes exporting risk free, as the insurance firm will reimburse the firm for any international defaults.

References

• 1000 Ventures: What is Lean Production?
• Goldman Sachs: Merchant Banking
• Export Import Bank of the US: Export Credit Insurance