5 Ways to Develop a More Efficient Factory (Photo by Bill Pugliano/Getty Images)

5 Ways to Develop a More Efficient Factory

Investing in new equipment can certainly help to capture efficiencies, though the gains could prove transient if you don't also engage the workers whose job it is to fill orders.

Is a lagging Chinese economy destined to cause trouble in North American markets? A sharp decline in investor sentiment overseas suggests precisely that. If you're managing a factory, now may be the time to find ways to boost efficiency.

Not that we're heading for a crash anytime soon. North American production is as healthy as it has been in years. According to the latest data from the RBC Canadian Manufacturing Purchasing Managers' Index, manufacturing activity improved to 55.3 last month -- up from 53.5 in September. (A score of 50 or above signals growth.)

In the U.S., The Institute of Supply Management's index of manufacturing activity zoomed back to 59.0 from 56.6 in September. The mark equals previous multiyear highs reached in August and March 2011.

The gains come as key Asian regions experience a sharp slowdown in production. For example, in China, manufacturing activity fell 30 basis points to 50.8 -- noticeably below the 51.2 reading economists were expecting. The miss suggests fewer orders and a general economic slowdown in the region.

Whether overseas economies get caught up in the mess is anyone's guess at this point, but why wait to find out? Preparing for the worst is smart business, and boosting output efficiency is a proven, timeless defense.

Investing in new equipment can certainly help to capture efficiencies, though the gains could prove transient if you don't also engage the workers whose job it is to fill orders. Here are five fine-tuning tips you can put to work immediately:

1. Review your client list. No business is immune from bad clients. Are any lurking in your portfolio? Study your books to find out what it costs to serve each client. Rank them according to profitability and the volume and variety of resources they consume. You may find that some are over-allocated by virtue of long-past troubles, or simply because they complain the most. Seek a portfolio that best fits your team and which plays to your factory's strengths.

2. Evaluate the line. Even the best factories botch orders from time to time. Where does your line break down? How often does it happen? Spend time evaluating your weaknesses so that you can address them via equipment or personnel changes.

Evaluate Bottlenecks, Set Goals

3. Assign a dollar value to bottlenecks. Don't change blindly. First, determine how much your bottlenecks are costing you. Is the problem big enough to merit investment in a new multimillion-dollar piece of equipment? Or would a cheap workaround buy as much improvement? Don't use precious capital until you're forced to.

4. Set goals. Once you've priced out what it would cost to get your factory in peak condition, set realistic goals for improvement and assign teams to implement your desired changes. Take the rollout in stages so as to not interrupt existing workflow. Then, check-in on progress regularly. Are the changes taking hold as expected? If not, why not? Presume nothing as you pursue greater efficiency in your operation.

5. Reward creative ideas. Also, give everyone an interest in seeing the transformation through to a successful conclusion. You can do that in two ways. First, be quick to recognize breakthroughs verbally and in companywide communications. Second, design a rewards program for sharing the fruits of success with everyone who contributes to making the factory function more efficiently.

We have no way of knowing whether China's afflictions will cross the ocean and infect our own factories. Preparing now by making improvements should allow for capturing short-term profits that can be socked away for tougher times.

The process needn't be difficult. Evaluate your portfolio for trouble clients. Survey the line for production bottlenecks. Take the time to find out what they're costing you and then set goals for recapturing those profits. And finally, announce a meaningful rewards program that allows your workers to enjoy some of the upside. That's a recipe for manufacturing success no matter what happens in other parts of the world.

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.

TAGS: Engagement
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