Mid-sized manufacturers are increasingly being squeezed on one side by large companies with the budgets and expertise needed to succeed in today’s fast-paced environment, and on the other by smaller, more entrepreneurial producers who are better able to adapt, specialize, and grow to meet the continually evolving needs of customers.

Here are three realities mid-sized manufacturers need to accept in order to shift their businesses from surviving to thriving:

Data is King

Without reliable information, many manufacturers will continue struggling to achieve on-time performance and delivery, maintain property inventory management, and reduce waste. There are multiple types of data these companies can access to help them be more competitive in the marketplace, including:

• Operational Data – order cycle time, delivery speed, scrap and rework, labor productivity, and machine utilization
• Customer Data – order frequency, reorder gaps, price sensitivity, churn risk, and margin by account
• Financial Data – contribution margin by product and customer, inventory turns, and cash conversion cycle
• Market Data – lead times versus competitors, pricing pressure, and demand volatility by segment

Manufacturers can properly collect and organize operational, customer, financial, and market data by connecting their Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), production systems, and logistics into a single source of truth. This will allow them to standardize KPIs across sales, operations, and finance. Furthermore, reviewing collected data on a weekly basis, versus a quarterly or longer time frame, will enable companies to more easily identify problem areas and institute changes to improve on-time production and delivery.

Automate or Fall Behind

With labor and production costs for mid-size manufacturers continuing to rise, automated processes provide an opportunity to level the playing field. Areas where automation can have a substantial impact on a company’s efficiency include order entry and validation, scheduling and capacity planning, design-to-production handoffs, inventory replenishment, and customer service workflows.

Automating work previously done by hand can incur substantial upfront costs if not budgeted correctly, but following certain guidelines can help minimize costs while producing substantial returns on investment. These include:

• Using modular, cloud-based tools (not massive custom builds)
• Automating one value stream at a time
• Funding automation from working capital improvements, not long-term debt
• Tying every automation project to a measurable payback – in months, not years

Get a Digital Backbone

There are a number of digital tools mid-sized manufacturers can employ to help them become more efficient, including using modern ERP as their system of record, a CRM that accurately reflects customer behavior, and a data layer for real-time reporting, as well as targeted AI for design, forecasting, and exception handling.

To avoid unnecessary costs, mid-sized manufacturers should be sure to fix existing processes before implementing any new software, standardize digital tools before customizing, and prove the return on investment before scaling.

Today’s customers expect Amazon speed, not excuses. Most mid-sized companies are unable or unwilling to deliver on this reality. However, the ones that are prepared to throw away their existing script and accept the need to continually adapt will benefit from better purchasing power, lower unit costs, and ultimately greater profits.