It’s no secret that the United States’ once prominent and thriving manufacturing base has suffered over the past 4+ decades, as global competition eroded American competitive advantages. However, as global standards of living have improved and thereby increased the cost of overseas manufacturing, American manufacturers have embraced technology to regain competitive position. This adoption of automation, robots/cobotics, and data analytics have combined with manufacturing-friendly governmental policy to spark growth in the U.S. manufacturing sector. So what are these technologies and what do they project for the manufacturing sector at the quarter century milestone of 2025?
Jan 25, 2019 5:00:00 PM
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Are any of your OEM products nearing obsolescence? It’s important to take action on legacy
product lines before their obsolescence affects your bottom line. The only way to stop that from happening is to extend the life of your legacy product while reducing the costs of continued manufacturing (both direct and indirect costs).
Remember that many OEM products follow the 80/20 rule (or Pareto principle):
- 80% of your profits come from 20% of your production staff’s efforts
- 80% of your product sales comes from 20% of your products
That means your legacy products could be taking up to 80% of your production time or floor space but only contributing to 20% of your revenue.
You have the potential to realize significant improvements in profitability by focusing on your most effective production efforts and eliminating work that doesn’t contribute to your profits – either through Product Line Simplification (PLS) or outsourcing. The bottom line: You need to identify your legacy products early and take the appropriate action. Does your manufacturing company currently have legacy products on its assembly floor? Use these seven measures to find out:
Topics: legacy manufacturing
Jul 22, 2014 7:00:00 AM
Profits are not gained when you’re using too many valuable production resources on legacy products nearing the end of their product lifecycle. As an original equipment manufacturer (OEM), the future growth and success of your company is dependent upon your discernment when it comes to legacy product obsolescence.
To maximize your profit potential, you need to know how to answer the following questions about the product lifecycle:
Jul 16, 2014 10:22:00 AM
As an original equipment manufacturer (OEM), when you choose to outsource to a contract manufacturer you must be certain that the contract manufacturer is producing your product at a reasonable overall cost and with the same quality your customers have come to expect.
When you have zero insight into your contract manufacturer’s costs, pricing and profits, you are clueless as to whether they’re giving you a fair quote or not.
Transparency is what creates true partnerships.
That’s why your contract manufacturer should be offering your OEM company total transparency by opening their books to you willingly. Acting as an extension or satellite unit of your business, the right contract manufacturer gives you ample opportunity to review their direct material costs, direct labor costs, factory overhead costs and profit related to your outsource manufacturing program.
The following are the top three ways a contract manufacturer with an open-book policy is beneficial for your business:
1. Identifying Discrepancies In Material Costs Is Encouraged
When your contract manufacturer offers total transparency, you are able to spot any inconsistency in material costs right away. This safety net helps in the event you know how to direct the contract manufacturer to a more cost-effective source or one with able to deliver quicker.
If you noticed this discrepancy without an open-book policy, you’d likely assume the contract manufacturer is padding their margins and, in turn, you’d become skeptical of their business practices.
Jun 18, 2014 10:00:00 AM
When you have a product line that’s continually shrinking gross margins or consistently lacking in sales, it is on the decline of the product lifecycle.
As the decision-maker at your OEM (original equipment manufacturer) company, when you have a legacy product on your hands, you need to take the best course of action.
Before eradicating the product from your manufacturing line via the product line simplification (PLS) methodology, you first need to determine if your legacy product is draining too many key assets or if it still has real market value.
This is where the 80/20 Principle comes into play for the OEM.