Every Manufacturing Business Must Know These Concepts & Innovations

Every Manufacturing Business Must Know These Concepts & Innovations

According to the IBEF, or India Brand Equity Foundation, both domestic and foreign investments made towards the manufacturing sector of India are on a steady rise.

The overall investments in fixed assets, which is also referred to as Gross Fixed Capital Formation, showed an annual growth rate of 10.44% between the financial years of 2016 and 2018.

With the emergence of several government initiatives such as ‘Make in India’ and industry-specific incentives, manufacturing companies in India are benefiting from large demographic dividends added with substantial workforce for the past few years.

Such is mainly due to the advancements in business-related systems and other essential aspects, such as supply chain management systems.

Concepts and innovations every manufacturing business must know

Manufacturing companies should be aware of several business ideals and concepts like supply chain management, value chain analysis, inventory management, etc. which would help to streamline the management process and increase productivity.

  • Supply chain management

An efficient supply chain management system plays an important role in the success of every manufacturing business. However, before learning about the supply chain management system, you need to be aware of the concept of the supply chain.

  • What is the supply chain?

A sequence of steps that a business module takes into consideration in order to deliver products or services to the end-user is called a supply chain.

The steps of a supply chain initiate from receiving raw materials from suppliers and conclude with the finished goods being delivered to the customer.

  • What do you mean by a supply chain management system?

The producers of raw materials, retailers, storage facilities, transportation mediums, distributors, etc. are all included in the supply chain of a manufacturing business.

Supply chain management system or SCM is the administrative structure incorporated by businesses to streamline every step of their supply chain.

Every business module must integrate an efficient SCM in their management system to optimise the manufacturing process which in turn will lead to substantial growth in generated revenue.

  • Value chain analysis

The process by which businesses can analyse the minor changes made in the initial stages of a product or service, which affects the valuation of the finished product, is known as value chain analysis.

Businesses perform value chain analysis by examining each step of the supply chain in order to identify methods to increase efficiency as a whole.

  • Components of a value chain analysis

An ideal value chain analysis can be categorized into two segments –

  • Primary activities

The primary activities of a value chain analysis comprise of several segments, which are essential for creating various competitive advantages. These segments are inbound and logistics, general manufacturing operations, marketing and sales, and customer service.

  • Support activities

The support activities involve several components which, upon improvement, enhances the primary workings of a value chain analysis. These support activities primarily involve procurement, technological development, human resource management, and company infrastructure.

So, conducting value chain analysis helps in enhancing the efficiency of the supply chain which in turn enables them to deliver the highest value even when the organisation has a low working capital.

  • Inventory management

Raw material and finished goods form the core of business modules of manufacturing enterprises. Any shortage of these key elements will bring the entire manufacturing process to a halt.

Hence, every manufacturing business should adopt an efficient inventory management system in order to be aware of real-time storage measures.

There are various types of inventory management systems; for example –

  • Just-in-Time Manufacturing

JIT is one of the most popular inventory management methods which are incorporated by several businesses in India. Production units of such businesses keep items in the inventory which are required only for the manufacturing process.

  • Material Requirement Planning

Material Requirement Planning, also referred to as MRP, is another type of inventory management method where business owners improve their storage system by procuring raw materials as per their sales requirements in a timely manner.

  • Economic Order Quantity model

An ideal EOQ model makes sure that a manufacturing business reserves adequate storage space allocated for inventory items in such a manner that excess purchase (and storage) of raw materials is avoided. Incorporating such a management system requires manpower and substantial working capital.

As an entrepreneur, you can improve your cash flow with an equipment loan from any financial institutions across India.

Business owners can also apply for a business loan to meet other types of financial shortcoming and streamline the manufacturing process, thereby develop an efficient supply chain management system.

Hence, manufacturing businesses can consider the above discussion to incorporate these management methods and streamline their supply chain to increase their overall revenue.

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