Manufacturing Units: How Can You Reduce Operating Cost?

By | 28/08/2014

i2Space has a 4 years long association with the manufacturing units – small and mid size businesses operating from suburban industrial zones of Hyderabad. Of late we are in touch with a few similar units from Bangalore area also. It doesn’t matter whether we define a category for them but for the sake of simplicity let us call them SMBs (or SMEs). Just to give you a rough idea of their business volume most of them have a monthly turnover of anything between 1 crore to 10 crores.

As of now we have more than a dozen SMBs clients. As we are their IT Consulting Partners and Solution provider we noticed a few pattern in their style of operation or in simple language their work culture. Moreover, most of them have similar stories to share.

As we are interacting with them on a regular basis we observed that a majority of them were started in early 70s and their founders have just retired or are on the verge of retirement. Reluctantly, the next generation is about to take over or have already taken over the reign of the company. Reluctantly because the next-gen is well educated, well-bred and accomplished their Bachelors/Masters degrees in US (first world education) and had some decent work experience in some MNC over there. It sounds good till here… isn’t it?

Now the Problem Part

After experiencing the best work culture in US (or abroad) they were in for a rude shock when they found that things in India, particularly in SMBs sector are still so old world. There’s no process, as for any information they need to depend on a few trusted and aging managers (who are there in the company from inception, i.e.  serving the same company from last 30+ years!). Everything is stored in some physical files or folders in some corner of that old almirah, stack-after-stack. To find a simple information like “how many purchase orders were generated last year?” during a certain month may take more than a couple of days to discover!

SMBs-Office-Mess

What should you do to get close to that efficient work culture?

To the next-gen CEO getting on to the day-to-day affair of the company looks quite intimidating. Let us see what smaller steps can be taken to gradually move to a process-oriented culture from the current people oriented culture and finally make it

Note: The following solutions are actually battle tested successfully.

  1. Use a professional eMail service.

Majority of the SMBs are using free GMAIL account as their email solution. Get rid of this quickly. If you want to use Google’s services use Google Apps for Business accounts. General Gmail accounts are not meant for businesses and does not reflect good for your brand, if you care for it! Also, allowing your people to access Gmail means they can access their personal mail account as well. It’s a productivity killer apart from a severe security threat as anyone can transmit your confidential information without you knowing anything about it.

  1. Purchase a domain name and get your own website

Yes, it sounds unbelievable but many SMBs don’t have a website of their own! A website is a virtual asset and it comes very economical these days. Go for it. Simply registering your company on some 3rd part platform with your name, address and a little detail doesn’t help in promoting your brand. Moreover, in the modern world your website creates a first impression of who you are. It’s definitely going to drive your sales.

3. Use off-the-shelf CRM/ERP or custom built software.

Majority of these companies have heard only about 2 software when it comes to productivity apps

  1. Microsoft Office
  2. Tally

To be honest, I don’t have any objection to the above software, as these are the most popular easy-to-use tool. But trying to solve your HR problem i.e. to maintain your employee data, leave balance on excel sheet is just NOT productive by any standard!

  1. Why NOT automate your Business Process?

Being a manufacturing unit you must be getting Enquires, Sending Quotaions, Receiving Purchase Orders, Invoice, Challans etc. Interstingly, there’s a process and there’s a pattern in your business – a good case that can be easily translated into software.

What’s the benefit of this automation?

  1. You get your daily, monthly & annual reports from the click of a button from anywhere on the globe.
  2. Compare sales volume.
  3. Good for customer relationship.
  4. Track employee’s performance.
  5. Have a ready to use Suppliers list with grades.
  6. Manage payments, overdrafts etc.
  1. Recruit a few young & fresh talents.

The aging work force is reluctant to change and can’t be easily adapted to your paperless office dreams. In my personal opinion, in absence of young people in the organization any software implementation, no matter how perfectly it is executed technically, it is bound to fail.

How does the above implementations reduce operating cost?

Yes, it’s NOT magic and it won’t happen in a month or two. It would take consistent planning and execution from your part. The measures suggested above has targeted almost every sphere of an SMB. If implemented carefully you’ll find that you no longer require an army of clerks, assistants etc. in the administration wing to help you in your day-to-day chore as you can easily track most of the things by a few clicks.

Get in touch with us – as talking to us doesn’t cost you any money. Moreover we love to talk… hear your problem and suggest a budget friendly solution. Please share your views/queries in the comment section below.

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