Now, are you an entrepreneur involved in manufacturing? In other words, do you process or convert raw materials, parts or components into semi-finished or finished products ready for consumption? Do you use machines, tools, labour etc through mechanical, chemical, biological processes or formulation to produce goods? Do you invent, assemble, fabricate etc? Are you in any way involved in physical, mechanical or chemical change of materials, substances or components into new products? If your answer is yet to any of these then the below write-up might be useful to you as an entrepreneur. You deserve to be called the ‘manufacturing entrepreneur’.
Indeed many categories of business activities can comfortably fall under manufacturing. Manufacturing is one of the critical sectors of any economy with lots of value added and multiplier effects, hence potential huge impact on society. Today I would like us to share some few vital things that the manufacturing entrepreneur should take into account. This business sector is very different from the service sector; also very different from pure trade (I mean buying and selling). It is also different from pure agriculture. Back to the point, what must an entrepreneur know about manufacturing? What vital issues give you success as a manufacturing entrepreneur? I know you desire success, don’t you? Let’s consider the below.
- As your business involves manufacturing, it is necessary that you understand manufacturing management very well. Basically, manufacturing management, or manufacturing operations management as some prefer to call it, involves overseeing all aspects of the manufacturing. You need to know all that goes on in that production outfit you call your business. I mean the procurement, inputs, design, processes, quality, outputs, packaging, logistics, what works and what does not work etc. Now, you wouldn’t ask me how to master manufacturing management. Simply ask, research, network, observe, talk to your people. I mean, seek out knowledge like your life depends on it.
- Just like other business sectors, efficiency and effectiveness of manufacturing are critical to your survival and profitability. Efficiency relates to how you can maximize your output per unit of input. Effectiveness relates to attainment of your objectives, say turning out 1000 units per day etc. You need to know that timing and synchronization of activities along the processing or production line is critical. Imagine having machines and labour ready for manufacturing but raw materials are missing? Imagine raw materials and labour ready for production but machinery lack spare parts, which might only appear in two months’ time. Do you understand what is called optimal output? Do you have an idea about your break-even point – where costs equal revenue? Do you know that you can only be profitable and sustainable when you operate above the break-even point?
- Quality considerations are vital. Remember that you the entrepreneur choses and determines the quality you want to come out in your products. Don’t tell me that your employees are the ones who decide and determine this for you. OK? You decide and demand what you want. Isn’t it? I say this because there are entrepreneurs who hopelessly blame their staffs for quality issues, as if they are not in charge. You get what I mean? Now, quality problems in physical products often are easy to know and come faster and sooner than quality problems in services. Remember, quality products that meet human needs and wants, will always sell. Period.
- Don’t forget maintenance. Feed the horse (machines) that work. Don’t only focus on production and forget the production capacity. I do hope you are not the type of entrepreneur who is so mean that you cry while spending money of maintenance. Maintenance expenditure is not a waste! It is revenue for the future! Don’t you agree with me? Come on Mr. Entrepreneur. Do you want to continue manufacturing tomorrow, next month, next year and continue selling and making money? Maintain your production capacity. It’s future money. It’s future cash inflow.
- Now, the human capital aspect comes in the form of health and safety, assuming of course that basic issues such as remuneration and other welfare issues are taken care of. Manufacturing involves a lot of process and production risks and this means that health and safety concerns are vital. If you don’t take care, your manufacturing outfit can easily turn into a famous accident, infection and death trap. Can you guess what will soon happen? You better make newspaper headlines for good reasons, not bad ones.
- There are also countless regulatory issues that pertain to the manufacturing sector. If you don’t like regulation don’t even think of venturing into manufacturing as your business. Today it’s about health and safety of your workers, tomorrow it’s about product recall plan, another day it’s about waste discharge into the environment, yet another day it’s about factory layout and design. If you have a look at all these statutory and regulatory issues, including all clauses of the Factory’s Act (I guess you have one in your area), then you will know what I mean. Don’t cut corners please. Just do what is required. It might be a bit painful but it’s good for you and society. Don’t you think so?
- Certifications are also vital. In this rapidly advancing world there are lots of standards coming up, and you simply can’t ignore them. Standards are good anyway, and your compliance as an entrepreneur actually pushes your facility up the ranks and also enables you enter markets that others don’t dream about.
Now, take some time and consider the above if your business involves manufacturing. There are opportunities in there that could add value to your business and move you to a higher level. This sector is a very deep one; no wonder its part of the real sector in an economy. Manufacturing indices in any economy are key indicators of economic health, and these statistics come from manufacturing outfits like yours. Isn’t this great? I believe you also know that countries and businessmen that have been smart in manufacturing have products that move around the entire world every single day. Can’t you see some around you even as you read this article? Hope you get what I mean.
We shall be sharing other issues regarding the manufacturing sector in the future.
Till then,
The Wise Entrepreneur