For North American manufacturers, the turn of the calendar wasn't exactly a welcome change. In the U.S., the Institute of Supply Management's index of factory activity fell to 51.3 in January, an eight-month low. In Canada, the RBC Purchasing Managers' Index ended only slightly better at 51.7.
Both metrics improved in February. Production, on the other hand, fell from 54.8 to 48.2, marking the third consecutive monthly decline in the U.S. Orders and output aren't matching up as nicely as many in the industry would prefer.
Yet we've seen this before. Manufacturing is a business of highs and lows, after all. Long-term success demands that managers account for volatility, even when times are good. How do you strike a balance without disrupting operations? Here are five tips:
1. Evaluate everything. You can't streamline or optimize until you know the strengths and weakness of the team on the floor. Set weekly, monthly, and quarterly targets. Measure results, and then spend time diagnosing why some are being met and others aren't. Do patterns emerge? Find out where your floor excels and you'll have an easier time optimizing.
2. Put more resources into what's working. Once you know what works, concentrate your efforts in those areas. Not just on the floor but in everything. Ask your sales teams to get more work that your team can do profitably. Reassign workers to high-performance projects as lagging, unprofitable projects are completed. Review your floor's portfolio regularly and seek to purge work that doesn't play to the factory's strengths.
3. Acknowledge best practices. Your discovery process will likely reveal home-grown best practices. Recognize these wins and the innovators who helped develop them. Document each one so they might be repeated factorywide, saving workers time as you optimize for maximum profitability. Everyone wins.
4. Align incentives to best outcomes. Foster a culture of innovation by introducing incentive pay that rewards factorywide achievement. Tie payouts to specific goals, evaluating and changing targets as the market shifts, allowing workers to profit from volatility rather than suffer the consequences of it.
5. Reward high achievers. Manufacturing is a team sport, obviously. But every factory also has a handful of leaders who help optimize output on the floor. Celebrate these high achievers via a structured system of rewards and note their achievements publicly. Make them role models for new workers to emulate.
Volatility is like a boogeyman to manufacturers: It's always lurking around the corner. Mute its impact by evaluating your operation and putting more resources into what you do best. Announce and celebrate best practices, align incentives, and reward high achievers whose efforts will be key to navigating the tougher times still to come.
John Mills is executive vice president of Business Development at Rideau Recognition Solutions, a global leader in employee rewards and recognition programs designed to motivate and increase engagement and productivity across the workforce.
