UK manufacturing is strong and machine builders are reporting full order books. But there could be a problem, writes Tony Hague.
Whether it is ‘weaker’ sterling assisting with export competitiveness or one of the other purchasing trends, you can’t help but feel a sense of optimism when speaking to machine builders.
Pretty much all of them are enjoying full order books, with many also predicting strong forecasts – so in short, there’s no need to be concerned, right?
Perhaps, but can you actually have too much demand? If you take into account the industry ‘vibe’, there does appear to be a worrying trend of ‘too much sales demand’ causing an array of problems for all sectors – from machine tools, printing and packaging, to food processing and medical.
When sales rocket and exceed production capacity – without any operational change – there is only one inevitable outcome, and that is extended sales lead times.
Some machine builders may have the luxury of being in a niche market where competition is limited, or they enjoy brand loyalty such that customers are prepared to wait – but that is the exception, not the rule.
This article first appeared in the December / January issue of The Manufacturer magazine. To subscribe, please click here.
Many congratulations to the PP Control & Automation team, who took home the prestigious Customer Focus award at this year’s The Manufacturer MX Awards, presented at a gala dinner in Liverpool.
Read the full list of The Manufacturer MX Award 2017 winners here.
Many companies now face more global competition than ever before and if they are pushing out lead times then they are simply allowing their competitors to get a foothold with their customers.
This may not be felt while order books are full, but what about the long-term effects?
What are the options?
Let’s assume manufacturers have exhausted the obvious short-term fixes, including overtime working and trying to pull in additional subcontract labour. Both of these are costly and the latter can also affect quality and productivity.
What’s next? Do you hire and train more people, or perhaps invest in physical space by extending the factory?
These both involve considerable financial resource, take time and carry risks. What happens if demand declines in the future, especially with the cloud of Brexit on the horizon? The company then becomes saddled with additional costs that they will need to cut, and cut quickly.
This is where strategic outsourcing can be such a remarkable remedy for a business. Note the word ‘strategic’. I’m not talking about outsourcing processes as a short-term quick fix, but a redeveloped supply chain and operational strategy that will provide long-term benefits to the machine builder.
There is nothing new about the theory of outsourcing. However, it is incredible how many machine builders in the UK underestimate what it can do for their business – supporting revenue growth, providing production agility and giving financial security and benefits.
Many companies rarely stop long enough to look inwardly and analyse their true areas of core competence – and how those processes are critical to success and the generation of revenue and profit.
Equally, they never look at activities that are non-core to them, where they are not ‘best in class’ and which actually cost them money rather than making it.
Why tie up valuable resource and skilled operators performing non-core processes that another business could do better?
Machine builders that have taken the time to do this analysis and have embarked on strategic outsourcing have seen some remarkable results.
At PP Control & Automation, a number of our customers have doubled their sales revenues with no additional people and no more space, a remarkable achievement and one that many firms struggle to comprehend, despite the conclusive evidence.
Using this approach, machine builders currently enjoying a full order book no longer need to worry about testing customer loyalty with increasing sales lead times. Instead, they should consider how strategic outsourcing could provide a long-term solution for managing growth and taking full advantage of the buoyant marketplace.
Remember – your competitors are probably already thinking about it.
PP launches videos to discuss the benefits of outsourcing
PP Control & Automation has tapped into the thirst for video content and digital marketing by launching three new videos designed to discuss the benefits of strategic outsourcing.
The company has used the power of animation to talk potential customers through the process and how it can help them increase capacity, reduce lead times and mitigate the risk of fluctuating sales.
Videos are between 90 and 150 seconds long and are available via the company’s website and through its social media channels, with the first one focusing on unlocking your growth potential, while the second one asks the question…are you losing orders because you’re too busy.
“We have spent a lot of time and effort in exploring how we can target new markets and the techniques we can use to reach them,” explained Tony Hague.
“One of the key areas we have focused on was digital media and generating new video content to promote across our website and social media channels was an integral part of this approach.”
He concluded: “It seems to be paying off too. The first video was only released in September and has already enjoyed 2,500 views and really brought the topic of strategic outsourcing to the fore.”
The third video introduces how PP Control & Automation has worked with Ishida Europe, a world leader in the design, manufacture and installation of weighing, inspection and packaging lines, to increase its capacity and sales.
A customer interview and on-site footage explains how clients can benefit from some of the points raised in the first two mini films.