American Manufacturing Operations: Processes, Challenges & Improvement

Manufacturing is about so much more than operating a single production line. Manufacturers throughout the U.S. have to manage their supply chain (suppliers), material needs, production schedule, inventory levels, quality control, warehouse space, order processing from customers, and cost management to get products made. 

When you expand your business across several locations, such as additional plants, warehouses, or suppliers, managing all of those areas together gets increasingly difficult. Information could be located in various systems; inventory records might not accurately represent what’s available; and delays in production can impact delivery deadlines. 

By understanding how manufacturing works and identifying opportunities for improvement, manufacturers will be able to make smarter choices regarding their operations. 

This article addresses the primary processes involved in manufacturing, typical problems encountered in manufacturing, and how ERP can assist manufacturers with improving their operations. 

What Are Manufacturing Operations?

Manufacturing Operations: Manufacturing operations are all of the processes, people, and equipment used to convert raw materials into finished products. This includes production planning, procurement, inventory management, shop floor activities, quality control, warehousing, order fulfillment, and cost controls. Each activity depends upon the others.

For example, production requires materials; procurement requires correct quantities of materials; and order fulfillment requires that finished goods are ready at the time they are needed by customers. 

Manufacturing Operations vs. Production

Production is about creating products. Manufacturing operations encompass all aspects of supporting production, including obtaining raw materials; developing plans for how much capacity will be needed at each stage of production; controlling inventory levels; ensuring quality standards are met; and delivering products to customers.

For instance, while a production department completes an order according to its scheduled time frame, there can be problems with recording completed units properly and/or delays in shipping those units out, which could result in the customer receiving his/her/their order later than expected.

Therefore, it is essential that all areas of manufacturing operations operate together as one cohesive unit. 

What Do American Manufacturing Operations Include?

Each type of manufacturer has its own specific way to organize the following six areas; however, all manufacturers have some form of each of these six areas:

• Production Planning & Scheduling: What should be made? When should it be made? And how much material, equipment, and people will be needed?
• Procurement & Supplier Management: Who are my suppliers? How do I place an order with them? How long does it take for the materials to arrive?
• Inventory & Material Management: Where is my raw material? Where is my WIP? Where are my finished goods? Where did they come from?
• Shop Floor Operations: How many work orders have been completed today? How many materials were consumed today? How many hours did my machines run today?
• Quality Management: Have I inspected every piece of incoming material? Have I documented every defect found on every item produced? Have I managed every item that was rejected?
• Warehousing & Fulfillment: How many units of product do I currently have available for sale? How many units of product do I need to prepare for shipment? Manufacturing
• Cost Control: How much money did I spend on materials? Labor? Production? Inventory? To determine the total cost of making this product and to know if I am spending too much money.

How Manufacturing Operations Work From Supplier to Customer

A standard manufacturing process includes: 

Customer demand > planning > procurement > materials > production > quality checks > finished inventory > fulfillment > customer. 

At each point in the process, there needs to be accurate data provided from the prior step. 

An example of how one area can negatively impact another would be if a supplier does not deliver their material(s) on-time; then those materials will not be present at the time they are needed for production. This could cause delays in the production schedule, delays in completing the finished product(s), and ultimately delay meeting the commitment made to a customer regarding delivery dates. 

Similar issues can arise due to incorrect/incomplete inventory records and/or failure to update production quantities in a timely manner. 

When teams base their decision-making upon outdated/inaccurate information about events occurring on the factory floor, it can lead to poor business outcomes. 

Common Challenges in American Manufacturing Operations

There are many issues that manufacturers encounter based upon company size, product type, and supply chain. 

Limited Visibility Across Departments

Purchasing, production, inventory, and finance departments may all keep separate records or utilize different software programs. As such, managers will have to gather information from multiple sources in order to get an accurate picture of how well their business is doing at any given moment 

Inventory Inaccuracy and Material Shortages

If the amount of material on hand (recorded) does not match the amount of material physically present in the warehouse/production area, purchasing may purchase additional material that is already on hand, or production may find out too late that they do not have enough material to complete a job. 

Production Planning Problems

A changing market (customer demands), materials available, machines’ capabilities, and priority orders will all create problems when trying to keep your schedule on track. If you do not have access to real-time information, then your team may find it hard to adapt their plan. 

Data Entry & Spreadsheet Tracking

Repeated manual entries into spreadsheets for tracking purposes; emails for approval processes; and reports generated manually are all time-consuming and may result in inconsistent information. 

Managing Multiple Locations

Manufacturers working from multiple locations require accurate information regarding inventory levels, production schedules, transfer of goods, and order status. Processes and reporting techniques used at each location can vary, which makes comparing/coordination difficult. 

Why Does Visibility Matter in Manufacturing Operations?

Manufacturers require quick responses to many of their daily operations’ questions: 

• What materials do I have? What materials do I need to order? 
• What products are currently being made? 
• Where are there production delays? 
• How much inventory (finished goods) do I have at each location? 
• Which orders from customers can I meet my deadline for? 
• What is the true cost of making a product? 

If all of this information is located in multiple places/systems, then providing answers to these questions will typically involve some amount of manual labor. 

Improved visibility allows manufacturers’ employees to find out when they run low on supplies; monitor how well products are being manufactured; and base their decision-making process on common data.

While improved visibility doesn’t eliminate all issues related to manufacturing/supply chain management, it does allow manufacturers’ staff to know exactly what is going on and act accordingly without having to worry about missing information. 

How American Manufacturers Can Improve Their Operations?

Improvements don’t have to mean big investments in new technologies. Many manufacturers can start improving their operations simply by addressing some of the issues they face every day in their processes and data. 

• Standardize your key processes. Develop common methods for handling purchases, receiving materials, issuing materials, inspecting materials, and producing reports across all departments and sites. 
• Improve your master data. Maintain accurate item record information, BOMs, supplier information, lead time information, and inventory information. Inaccurate data can cause problems regardless of how well you configure your systems. 
• Connect your purchase planning process with your production planning process. When developing your material requirements plan, review it against what is currently on hand, when you expect deliveries from suppliers, and when you will be producing products. 
• Strengthen your inventory management process. Consistently record receipt transactions, transfer transactions, material usage transactions, and inventory adjustment transactions so that your system’s records continue to be useful. 
• Eliminate unnecessary manual work. Find out where there are repetitive tasks such as entering data into spreadsheets, manually tracking materials using spreadsheets, and manually creating reports that can be eliminated through improved processes or integrated systems. 
• Provide managers with better operational reporting. Managers should receive timely and relevant information regarding material availability, production status, inventory levels, outstanding orders, and manufacturing cost.

The Role of ERP in American Manufacturing Operations

An enterprise resource planning (ERP) system is used to connect all major business processes and data into one single platform. The way an ERP system is set up will determine which processes it links together, such as procurement, inventory management, production scheduling/quality control, warehouse operations, sales, and accounting/finance. 

Connecting Manufacturing Processes 

An ERP system allows you to see how each process affects the other when they are linked through workflow. This means that if there is a problem in one area of your manufacturing operation, it will be visible to everyone else who uses the same ERP system. As an example, production planners can view what materials are available at any given time based upon their current inventory levels and material requirements. 

Creating a Single Source for Operational Data 

An ERP system eliminates the need for multiple record-keeping systems for purchasing, inventory management, production, and financial reporting. If all transactions are entered correctly and in a timely manner, then all employees working within the organization have access to the same operational data. 

Visibility Across Multiple Sites 

For organizations operating out of several sites, including factories and/or warehouses, an ERP system provides a method to manage product movement between sites along with reporting on orders placed by customers. The type of reports that can be generated depends on the ERP software being utilized, how the software has been configured and the accuracy and completeness of the underlying data.

Although an ERP system offers many benefits to an organization, it does not automatically correct poor business practices.

When Does Your Manufacturing ERP Need Improvement?

There are several times that your current ERP may be due for evaluation, including: 

• Teams are using spreadsheets extensively outside of the ERP system. 
• Inventory record accuracy is consistently lower than actual inventory levels. 
• Production planning occurs independently of both purchasing and inventory management. 
• Each plant has different procedures. 
• Reports have to be manually combined. 
• Employees continually input the same information into multiple systems. 
• It takes managers too long to get real-time views of production, inventory, and orders.

However, these issues don’t necessarily indicate that it’s time to purchase a new ERP. In many cases, the issue can be resolved through better configuration, process improvements, integration with other systems, cleaning up the data, or increasing employee adoption of the existing system. 

How does Indictrans help American manufacturers operate more efficiently?

Indictrans assists organizations in evaluating their current operations and determining ways that their ERP system can better support those operations. 

In addition to providing consulting services related to ERP and technology, Indictrans identifies areas where there are broken workflow processes, excessive manual labor, poor-quality data, and/or a lack of connection between the organization’s current IT infrastructure and its daily manufacturing requirements.

When it comes time for ERP transformation, Indictrans will provide assistance in implementing, migrating, integrating and/or enhancing an organization’s ERP solution according to what is needed by the business. 

Examples of this type of enhancement could be linking together procurement, inventory management, production planning/execution, warehouse management, sales order processing, and financial reporting. 

Let us know how you would like to discuss your manufacturing operation! 

Conclusion

Manufacturing companies rely upon much more than just the production process itself. All areas, including procurement, inventory management, production planning, quality assurance, warehousing, order fulfillment, and financials, have to be coordinated. 

Establishing common standards for each area, providing reliable operational data, integrating various systems used throughout the company, and creating reports that provide meaningful information about performance help manufacturers increase efficiency and reduce costs. 

Manufacturers who experience difficulty managing their operations due to either a lack of integration among different systems or the use of outdated methods should begin by evaluating current business processes and how they utilize their ERP system. 

FAQs on American Manufacturing Operations