Housing has long been a reliable barometer of the health of our industry. The good news is that housing starts are making a slow but steady comeback and are predicted to reach pre-recession levels by 2015, according to June’s Virginia Tech Housing Commentary by Urs Buehlmann and Al Schuler. While we all wish the economic recovery was happening even faster, there is a bright side to this slow-but-steady pace of growth for manufacturers of wood products. You still have time to get ahead of the curve and position yourself to take maximum advantage of future opportunities.
Since the downturn of 2008, many manufacturers have either mothballed or eliminated manufacturing capacity and personnel. For these manufacturers, the somewhat unpredictable pace of the recovery raises challenging questions. Will the month-to-month growth remain steady enough to restart latent capacity? When is the right time to add new equipment? When do I add capacity and people?
The root of this dilemma is multifaceted. Even with the high unemployment rate, skilled employees can be difficult to find, and training can be costly and time-consuming. I recently spoke to a customer who said he is seeing strong growth right now, but is “scared to death” to hire more people because of cost and the risk created by the current economic uncertainty.
So what is a manufacturing business owner to do? Fortunately, there is good news on the horizon. We now live in a technology-driven world. While I always say that software is not a silver bullet, it can be the solution to improving output while keeping your personnel growth manageable during transitions.
If you didn’t install or upgrade your software before 2008, NOW IS THE TIME.
While not quite at full capacity, many companies are starting to see signs of positive growth. Now is an ideal time to invest in software implementation as business cash flow improves and demand grows. Whether you are implementing CAD-CAM, CRM or EMS/ERP, there are two good reasons to implement now rather than waiting. First, your key people have more time on their hands now than they will when you are in full expansion. An implementation today means better overall utilization of available resource bandwidth. Second, implementing a solid solution now will allow you to grow more efficiently and at higher profit, with better resulting customer service when the recovery gets stronger.
Software can be a significant multiplier to your business. In the same way that a CNC machining center can optimize production, improve quality, and allow for more product variety in a particular department, a proper software system can optimize your business process, shorten lead times, reduce errors and streamline your entire operation. Many companies that we have assisted over the years have simultaneously experienced growth in sales, reduction in lead time, faster time to market for new products and improvements in quality, all without significant additions to staff or equipment.
What is the right solution? If you are a small company, there are several options that can help you process orders and create information for the shop floor (cutlists, CNC code, barcodes), which are often key to growing to the next level.
If you are a medium-to-large sized firm, you are looking at a more significant investment of both cash and time. If you are considering an ERP-type solution, be prepared to make it a strategic part of your business plan. Finding the right software for your company will take time and careful analysis. A quality implementation of the right solution can have a measurable positive impact on your overall business, but if you fail to incorporate it into your overall strategy, you could be making a mistake.
Many businesses are now experiencing slow but steady growth that we all hope will persist. As you make plans for the next few years and consider where to invest, I strongly encourage you to include an investment in software as part of your strategic planning. The software industry has matured significantly within our industry in the last 10 years; some great solutions are available that can not only boost your business when the recovery is complete, but can help you manage growth more effectively along the way.
I hope that you take advantage of available technology to help you do it more profitably while maintaining customer satisfaction. Now is the time!
Russ Kahn has worked in the furniture industry for almost 20 years, including manufacturing, software and consulting. He currently is the Product Manager for manufacturing solutions at 20-20 Technologies and consults with manufacturers on the integration of technology into their businesses. For information contact (514) 332-4110; email@example.com; 2020Technologies.com.