How To Run A Manufacturing Business - Kotak Bank
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Once your manufacturing business is up and running, the next thing to do is focus on the continuous improvement of products and processes. Your manufacturing business has a variety of components that work together in harmony to ensure its smooth functioning. It is of utmost importance to evaluate every department and their functioning to incorporate necessary changes and improvements from time to time.

Here are a few ways you can optimize the functioning of your manufacturing business:

1. Engage your employees:
This is an often overlooked but integral component in the functioning of any business. Employee engagement is the degree at which employees feel passionate about their jobs and committed to their organization. Creating an environment where your employees feel valued leads to an increase in motivation and productivity. Some of the leading manufacturing organisations in the world have implemented employee engagement strategies to boost the performance of their workforce.

2. Maintain quality:
Never let your customers down by sending out a batch of inferior quality products. If your suppliers are at fault, don't be easy on them or just blame them — demand immediate corrective measures, or replace them. Never give your customers a reason to complain. Always keep record of the yield, which means the percentage of products manufactured correctly. Also keep track of rejected/returned materials and conduct regular quality check of materials incoming from the supplier.

3. Make your equipments last: Manufacturing companies need to invest in a lot of equipments and machines. Try to get hold of quality gear, for a good price, and then keep them clean, well-oiled, dust-free and rust-free to make them last longer. Regular and timely servicing is important.

4. Improve management
: A poor management system in manufacturing can result in inferior quality products with defects and safety issues. This could not only affect profitability but can also endanger the survival of the business. It is important to hire capable leaders and managers who can oversee the functions of the various departments such as supply, production, marketing etc.

5. Improve efficiency: Keep regular track of the total manufacturing capacity being used, along with the quality and performance of equipments. Also make sure human resources are allocated prudently and functioning efficiently. Evaluate your existing methods of production to see how it can be improved and made more efficient? Look for ways to improve quality control. Streamline the procurement process, the production process and the distribution process to cut down on cost.

6. Optimize cash flow:
A strong cash flow is a necessity for every manufacturing company. And if your company is already generating a strong cash flow, there is always room for improvements. Here are some of them:

  • Avoid excess inventory: This enables you to free up cash and channel it into areas of growth.
  • Raise prices to increase profitability: Are your products underpriced? Keep a regular check. Well thought-through increase in prices for valued-added and customised products can be done without negative impact on business.
  • Improve the product mix by updating and improving old products.
  • Establish open communication with suppliers to help facilitate price negotiations.
  • Outsourcing can help improve your cash flow and might be worth considering as your business begins to grow.

7. Bookkeeping:
Keeping a proper record of your company's financial transactions goes a long way in running your business smoothly. Good bookkeeping makes it easier for you to manage your cash flow, fulfil your tax obligations, conduct effective business planning, and have your figures in order for audits.

Read Also: Key Point for Growing Your Manufacturing Business

8. Sales and Marketing: Have a sales plan ready and chart out a systematic sales pipeline for 2 years. Make sure to create a unique business identity in the marketplace, and impress upon your customers the benefits offered by your products as against that of competition. Ensure all your potential customers know about you and your products. Control and build your own channels to market, and don't just rely on word-of-mouth alone. You will need to keep a close eye on the competition and work towards meeting the needs of the marketplace.

9. Keep innovating:
This is one way to make sure that your products continue to attract a growing audience. Think about whether a minor change in your product can bring in new attention or make it more efficient? Reach out to your audience and listen to what they have got to say. You could look at bringing about changes in your product to suit their preferences or needs, or create product variations.

Lean manufacturing
is a production philosophy that is high on efficiency. It is about continuously evaluating and improving business efficiencies, simplifying and streamlining the business approach to cut waste, improve quality and ‘do more with less’.

Lean manufacturing involves regular monitoring of overproduction, lag time in production steps, inventories of WIP goods, efficient moving of materials, reworking of tasks, efficient movement of equipment and people between tasks, time taken to fix production mistakes, and efficiency of workforce.

There are many more aspects of running a business, which can be best learnt on the job itself. You might make mistakes along the way or you may face a variety of challenges, but keeping a tab on the aspects mentioned above can help your business run smoothly.

Read Also: What is Business Loan

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.