With Orders Shrinking, Manufacturers Focus on Operational Efficiency

May 16, 2023

Manufacturing economic activity has contracted for four consecutive months, states IndustryWeek writer @Anna Smith in her article, ISM Report: Manufacturing Activity Improves Slightly But Still Continues to Shrink. (As a side note, we would like to congratulate Anna on her promotion.)

The Institute for Supply Chain Management’s Purchasing Manager’s Index for February 2023 increased incrementally by 0.3 percent over January’s report at 47.7%. Anything lower than 50% indicates market contraction, the article states.

Other indicators of contraction in February include the new orders index, which was at 47%; employment which fell 1.5 points, and production, which dropped 0.7 percent. Meanwhile, prices have climbed 6.8%. However, for many manufacturers price hikes are covering higher costs, such as raw material increases, rather than enhancing profitability.

“With Business Survey Committee panelists reporting softening new order rates over the previous nine months, the February composite index reading reflects companies continuing to slow outputs to better match demand for the first half of 2023 and prepare for growth in the second half of the year,” says Timothy Fiore, chair of the ISM’s manufacturing business survey committee, who was cited in the article.

Leaning Into Continuous Improvement During Challenging Times

So, how can manufacturers do more with less to improve operating margins?

QAD Redzone helps manufacturers create a winning culture of continuous improvement (CI) by pairing Lean production techniques with a mobile app frontline teams use for collaboration, real-time performance monitoring, compliance, reliability, learning, and more. In addition, factories deploying the solution are coached by industry experts to ensure successful adoption of the platform and new standard work.

In our most recent benchmarking report, conducted with 1,000 factories globally and 458K frontline workers, companies deploying QAD Redzone achieved significant results in just 90 days. Across more than 21.8M production runs, manufacturers drove overall equipment effectiveness (OEE) by 14 points and achieved average productivity gains of 29%. The report further demonstrates that by the end of the first year, manufacturers had improved OEE by an astounding total of 37 points.

Economic downturns can be stressful for leaders and teams. However, QAD Redzone provides tools and data that manufacturers can use to improve business results in any economic condition. With better clarity into processes and a communication and collaboration platform, teams can share ideas and knowledge, rapidly address issues, and boost production and product quality.

With QAD Redzone, you can empower production teams to drive throughput, reduce costs, and deliver profitability back to your business.

Learn more about QAD Redzone.