Focus On Improving Process Efficiency to Prepare For a Recession

Michael Corr

Founder and CEO, Duro

July 26, 2022


The manufacturing industry continues to be disrupted by supply chain issues, inflation, and pandemic staffing shortages. Fears of an impending recession add to worries for hardware product designers. They need to take stock now and consider how to set themselves up for success to weather further market shifts.

A recession could cause unpredictable demand

Today, manufacturing accounts for 11.8% of the U.S. economy. It’s an essential industry relied on by everyone, from consumers to businesses and governmental organizations. But that doesn’t mean it’s recession proof; the prolonged effects of the pandemic are already causing challenges. Product manufacturers need to evaluate business practices among pending market uncertainty. Fluctuations in consumer spending and potential sales disruptions could mean fewer orders and more shifts in the supply chain.

Product manufacturers should start by improving process inefficiencies

In times of crisis, product manufacturers must review their costs. Considering that the price of raw materials stays relatively stable, they would need to significantly change material volumes in order to impact costs this way. Therefore, cost savings typically happen by cutting people or adapting processes. Reducing human resources creates even more room for error and costs as individuals have increased pressure to achieve the same workload with fewer resources and higher stress.

It’s much more beneficial in the long run to focus on improving the efficiency of processes. This, in turn, will reduce the requirement for labor.

Despite the success of the work popularized in the 70s by Toyota to reduce waste with its 5S methodology there are still a lot of inefficiencies in manufacturing and engineering, today. There are inconsistencies in the way data is managed as a result of too many manual tasks. New technology isn’t being leveraged to its full potential to improve the lives of engineers.

Cloud technology ensures different teams can access the same data

Over the last two decades, there’s been significant advancements in both machine learning and cloud infrastructure. However, these technologies haven’t yet permeated into the manufacturing industry as much as they could. There’s a huge opportunity to leverage modern cloud tools and APIs to adapt and improve processes by:

  1. Improving the design of data entry. Today there are lots of manual steps to get data in and out of engineering software tools. An engineer might need to enter component information for each new product one by one. There’s lots of time wasted getting this data into the relevant platform. With new automation technologies and APIs, organizations can automate as much as possible, reduce the number of clicks and ensure data entry and validation don’t take up valuable engineering time.
  2. Permeating data across multiple systems seamlessly. Building hardware products relies on many different teams, suppliers, and software platforms. Not only are engineers wasting costs when manually entering product data into these disparate systems, but they also need to ensure they stay in sync and validate that each team has the correct revisions. It’s a slow process and prone to error. Software APIs have significantly improved allowing data to be quickly shared across all relevant tools with a single click.

Product manufacturers must reevaluate efficiencies in development

As hardware design teams look for ways to preserve cash while preparing for recession, they should:

  • Invest in technology. Although spreadsheets and manual processes seem cheaper, they are difficult to manage, and the associated overhead results in them being even more expensive in the long run. By switching to a PLM system, you can manage data more effectively through a centralized single source of truth with digital connectivity. PLM provides better visibility to make it easy to share information between product designers, suppliers and manufacturers in different locations.
  • Automate data processes. Think about the way data is managed and how that impacts procurement and manufacturing capabilities. Manually sending out a BOM or emailing different suppliers to get quotes will take time. In order to act quickly, you need streamlined ways to share information. Automation won’t replace the job of an engineer, designer or manufacturer, but it will help them to focus more of their time on what makes them more valuable: adding context and reasoning behind the product design.
  • Reevaluate efficiencies in product development. There are always ways to improve how a product is made. It might seem more cost effective to look for offshore factories with a reduced labor rate. But if a product requires a large amount of labor to assemble and test then you are locked in to using only low labor rate suppliers, limiting your flexibility to adapt as market conditions change. Look for ways to automate assembly and testing, thereby reducing your dependency on cheap labor to keep your total landed costs low. Design products to use machines and processes that include more automation. The lower the percentage of labor costs required to build your product, the more flexibility you will have to produce it anywhere in the world to best take advantage of supply chain fluctuations.

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