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The rise in food prices is all over the news these days. The USDA and the Consumer Price Index tell us that, in 2023, grocery store purchases were up 5% from the previous year, while eating out cost an average of 7.1% more. This year, those costs are set to bump up another 1.3%. But, if you work in food manufacturing, (or buy groceries for your household) you don’t need the government to tell you those prices are rising.

It’s the trickle-down effect. Challenges facing food manufacturers mean higher production costs, which are ultimately influencing everyone’s grocery bills.

Here’s why, and what food manufacturers can do to save money on the front end to stop that trickle down.

Challenges affecting food prices

Some of the issues food manufacturers are navigating through that can ultimately show up in prices at the grocery store include:

Supply chain disruptions. Whether it’s geopolitical tensions, droughts, wildfires, strikes, or other events, it can disrupt the supply of raw materials food manufacturers use to get the job done. This can and does create delays, backlogs and other costly challenges.

Price inflation. Before price increases hit the grocery store shelves, the rising cost of things like grain, meat and dairy affects manufacturers who use those raw materials to make their goods.

Shipping costs. Rising fuel prices affect how much it costs to get those raw materials to food manufacturers, whether it’s coming from across town or across the world.

Labor shortages. The continuing battle to hire and train good people, and retain the ones you have, contributes to labor costs at the plant, which contributes to rising costs for the end user.

Evolving demand. Consumers are ever changing in their preferences and expectations. People are increasingly demanding sustainability, ethical sourcing, friendly practices like free-ranging and more. And dietary trends shift too, with plant-based alternatives growing in popularity on the one hand and minimally-processed meals on the other. This makes it difficult for manufacturers to forecast to accommodate the demand.

Regulations. Compliance with FDA regulations can be complex at best and lead to inefficiency and higher costs for manufacturers at worst. It’s especially prevalent in yield, when manufacturers are trying to hit the “wiggle room” the government allows between what the package label says and how much product is actually in the package. Not wanting to be out of compliance, manufacturers often overfill packaging to reach that sweet spot, but it means they’re actually giving away product… and profits.

All of these challenges can have a direct impact on manufacturing costs and will inevitably trickle down to their customers. It boils down to:

Higher production costs. This is by no means unique to the food manufacturing industry. Higher production costs on things like raw materials, labor, transportation and more mean higher costs to the customer – that’s a fact of life for most every business.

Supply and demand uncertainty. Supply chain disruption leads to shortages, which cause prices to rise.

How food manufacturers can tackle these challenges

In the short term, agility is key. But strategic planning, process improvements, and a focus on efficiency can shore up food manufacturers for the long run.

Sales, Inventory & Operations Planning which we call SIOP, takes the sales and operations planning (S&OP) process that most manufacturers use and adds inventory to the mix. At USCCG, we find inventory is often left out of the planning process, but it can be as important of a variable and a strategic tool. Following this methodology helps manufacturers eliminate waste, increase efficiencies and achieve an optimal level between not enough and too much.

It’s also an unparalleled tool for inventory management, which is a tricky business today given all of the challenges this industry is facing.

If you would like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

Sales Inventory and Operations Planning eBook

Process improvements. One way streamlining and refocusing your processes can help manufacturers now is in the area of yield. Getting a handle on yield — improving processes so you’re not giving away product — can save millions of dollars. To learn more about how one food distributor saved $2.3 million per year by improving their yield, read “Food Distributor Masters Management by the Numbers to Improve Yield.”  And speaking of management by the numbers…

Implement a Solid Management Operations System. Many manufacturers, whether food or other industries, tend to manage on the basis of what has worked in the past, a gut feeling by seasoned managers, and other methods. At USCCG, we like hard numbers, streamlined processes and everyone doing the same job the same way. And about that…

Focus on training. It’s crucial to have all shifts, all facilities and all employees working in tandem, doing the same job the same way. It’s how you create the proverbial well-oiled machine.

None of these tactics will stop challenges from happening, but they can and do make your operations more efficient, and in turn, save you money. Not only will it improve your bottom line, but you might just be able to trickle the savings down to your customers, too.

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How’s your supply chain running these days? If you’re like most manufacturers, you’re still experiencing challenges. Big challenges. The pandemic threw the worldwide supply chain into chaos and it hasn’t yet recovered, but the truth is, there have always been supply chain issues bedeviling the industry. The pandemic just exacerbated what already had the potential to go wrong and uncovered new problems lurking just below the surface.

Just-in-time strategies, which were (and continue to be) popular methods of having just the right amount of inventory on hand at any given time, left manufacturers vulnerable to supply chain disruptions. The increasing complexity of global supply chains didn’t help the situation, nor did the pervasive lack of visibility into supply chains themselves.

What are manufacturers facing this year in terms of their supply chain? Let’s take a look at these issues, and examine some ways USC can help.

Manufacturers supply chain challenges for 2024

Materials shortages. Global instability, the lingering effects of the pandemic and other factors are leading to shortages of raw materials and components. Production delays, increased costs and unhappy customers are the result. And speaking of costs…

Rising freight costs. As fuel prices ride the same roller coaster we’re all seeing at the gas pump, and labor shortages and ongoing congestion at ports collide, it means costs to get those components and materials are going up, eating into your profits. And speaking of labor shortages…

Labor shortages. This problem is ongoing, and we have to say, it’s one thing that wasn’t caused by the pandemic. Manufacturing workers are aging and retiring, and there isn’t a large pipeline of younger people with the skills to replace them. It means reduced output and productivity, dwindling motivation and drive, and the loss of institutional knowledge.

DRIP. It stands for data rich, information poor. When you’re talking about the supply chain, it means you need to use data to its fullest. Outdated inventory systems won’t cut it.

Tactics that can help

Diversifying supply chains. Having too many eggs in one basket has proven costly when that basket falls apart. Reliance on any one supplier, especially if that supplier is overseas, is becoming yesterday’s strategy that is just not working in today’s market.

Reshoring. Supply chain disruption, ongoing global instability, higher costs (including higher labor costs in China), increased lead times and more hassles are leading companies to reconsider foreign sources. Many are already doing it. Yahoo Finance reported in June 2023 that 80% of manufacturers are now considering or acting on reshoring some or all of their production. A couple of quick examples: General Motors invested $7 billion in production facilities in Michigan to not just manufacture electric vehicles but the batteries that power them. Intel invested $20 billion in a new semiconductor manufacturing plant in Ohio, and is investing $30 billion for a similar facility in Arizona. Some manufacturers are “nearshoring,” bringing production closer to home, from China to Mexico, say. Not only will this reduce lead times, improve quality control and leave companies less vulnerable to global unrest, it will also create jobs here at home.

SIOP. We laud this tactic often because it really does improve efficiency, but in the age of supply chain disruption, it’s crucial. Sales, Inventory and Operations Planning (SIOP) is a collaborative process that aligns all departments. It involves using inventory as a strategic tool, demand management and supply planning, giving you the ability to capture, analyze, integrate and interpret data to give you a strategic advantage.

Learn more about SIOP in our free eBook, Sales, Inventory and Operations Planning: It’s About Time.

Solid training. The labor shortage isn’t going away, and we’re finding that many manufacturers are investing in training, ensuring that everyone is doing the job the same way, with rock-solid operating procedures. It’s a powerful way to keep institutional knowledge within your facilities, instead of losing it when people retire.

At USC Consulting Group, we have over 55 years of experience helping manufacturers ramp up their efficiency, production and operations. It’s especially crucial to be firing on all cylinders during challenging times… and we’re in them, right now. Give us a call and let’s talk about how we can help.

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What’s on the road ahead for consumer goods manufacturing? Although the industry is multifaceted and varied, encompassing everything from household goods to food & beverage to apparel and more, most arms of the consumer goods industry are facing similar challenges. Supply chain woes. Geopolitical instability. Economic uncertainty paired with rising costs. Ecommerce disruption. Changing consumer preferences. Labor shortages.

A common thread running through all of those challenges: Stress. According to Deloitte’s “2023 Consumer Products Industry Outlook,” which surveyed executives at CG companies with more than $500 million in revenue, seven of 10 respondents said their job is more stressful now than it was five years ago, due to those ongoing challenges. We believe execs in many industries feel the same.

Here are some trends affecting the consumer goods manufacturing industry today:

Consumer Goods Manufacturing Trends

Challenges remain on the road ahead, but the ride is getting smoother.

Continued supply chain disruptions. No, it’s not over yet. The supply chain bottleneck that most industries faced during the pandemic has improved in some areas but has not gone away. According to a new survey by Coupa Software, 82% of supply chain leaders report bracing for continued supply chain issues in the next year. The industry is looking for ways to take the risk out of its supply chain, namely by reshoring or nearshoring supply to offset the worry about once-reliable sources. One of the wild cards in terms of supply chain is the current geopolitical instability, with the war in Ukraine lingering and tensions heating up with China and Russia.

Economic pressures. A recession is looming. (Or is it? Nobody seems to know.) Prices are rising. Inflation is through the roof. In addition to impacting consumers’ pocketbooks and spending habits, these economic factors are in league with rising costs of raw materials, transportation and labor costs to create a miasma of financial uncertainty. It has caused 80% of respondents in the Deloitte survey to report they’re raising prices further to compensate.

Labor shortages. For the consumer manufacturing industry, the labor shortage doesn’t just mean a lack of warm bodies. It also means a lack of skilled workers. The old guard is retiring, and the new generation taking its place needs the skills to operate today’s complex machinery. It means increased training and outreach from trade schools. The problem is, the numbers of young people going into the manufacturing field are dwindling just when we need them most.

Changing consumer preferences. While human behaviorists will be studying the effects of the pandemic on consumer spending for years to come, we see one thing clearly. Preferences and habits are changing. A heightened awareness of the environment is driving younger consumers toward sustainable products, and companies themselves are being held to those standards. Buyers are turning to the comfort and familiarity of known brands rather than taking risks. They are also more focused on health, having lived through a pandemic.

e-and-m-Commerce surge. This is also about consumer behavior, with a twist. The ecommerce surge that started during the pandemic is showing no signs of slowing down. According to Forbes, in 2023, ecommerce sales are projected to grow to 10.4%,with the global ecommerce market hitting $6.3 trillion. Mobile commerce (people making purchases from their smartphones) is poised to hit $415.93 billion this year. For consumer goods companies this may mean the need for a souped-up e-and-m-Commerce site for direct-to-consumer opportunities.

Proven methods for success

At USC Consulting Group, we specialize in helping companies reduce operating costs and improve efficiency… in this economy, or any economy. In our 55+ years in this business, we’ve rolled with a lot of changing tides and helped our clients do the same. We find that trends, challenges, economies and other factors can affect those tides, but tried-and-true operating methods can right the ship every time.

Two of the most powerful methods we use to help companies become more efficient and profitable are SIOP and LSS.

SIOP. Sales, Inventory & Operations Planning takes the normal sales and operations planning (S&OP) process and adds inventory to be as important of a variable and a strategic tool. Following this methodology helps manufacturers eliminate waste, increase efficiencies and achieve an optimal level between not enough and too much. It’s also an unparalleled tool for inventory management, which is a tricky business today given supply chain shortages and changing consumer preferences.

Balancing between too much inventory and too little has been the ongoing challenge after the pandemic, and SIOP can help you get there. If you would like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

Lean Six Sigma. Two sides of the same coin, Lean looks at making processes more efficient and reducing lead times, while Six Sigma focuses on cutting down on defects. Both are useful goals when aiming to optimize your processes, throughput and ultimately, your bottom line. Together, Lean Six Sigma is a powerful process methodology.

But it takes years to master the balance between speed of throughput and quality of the end product. We have certified black belts in LSS on staff to guide these projects but also train your staff in the techniques. The goal is to make process improvement changes and ensure they are sustainable for years to come.

Interested in hearing more about how we can help? Give us a call and we’ll start by listening.

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William is the newly promoted COO at Acme Widget Company. He recently conquered his operational issues by improving efficiency and increasing throughput with the help of USC Consulting Group.

William’s current foe: Manufacturing labor shortages and the growing skills gap.

William has noticed, as his seasoned Acme Widget employees retire or leave, they take their hard-earned institutional knowledge with them when they walk out the door. The turnover is driving up operating costs and finding replacement workers with the skills, knowledge and expertise to do the job, which is increasingly technical, is a growing challenge.

But it’s not just that. It’s finding workers, period.

Analysts predict 2.1 million manufacturing jobs will be unfilled by 2030, costing the U.S. nearly $1 trillion in GDP.

So how does William retain his skilled workforce while finding new hires? He called his friends at USC Consulting Group. Together, they came up with a plan: An advanced training course to retain employees and an expediting strategy to onboard new talent. The goal was to upskill current employees with the knowledge they need today and tomorrow, cross train them to do multiple jobs, and speed up the learning curve for new hires.

It was a win-win! Employees dove into the training and became more engaged. They saw Acme was investing in them and their futures, creating loyalty and appreciation on the shop floor and beyond. Plus, William’s new hires joined the team quickly and seamlessly.

With better employee engagement and training, William saw improved retention along with increased production and reduced operating costs. He created a work environment where his workers were skilled, felt valued, and took pride in getting the job done. The skills gap was closed and labor shortages were no more!

Are you experiencing manufacturing labor shortages and a growing skills gap on your shop floor? Give USC Consulting Group a call and they’ll put their expertise to work for you.

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After a couple of difficult years, manufacturing is roaring back in the U.S. There’s a lot to be optimistic about. Consumers are consuming again, fueling high demand. Manufacturers in many facets of the industry are reporting a big uptick in orders, and it shows no signs of slowing down. But, that doesn’t mean manufacturing will enjoy a challenge-free year. There are several factors that continue to bedevil the industry. Here’s a run-down of some of the manufacturing challenges you might be facing in 2022, and strategies to handle them.

Challenge: Shortages of skilled workers

This is a big problem for many industries, and manufacturing is getting hit especially hard. IndustryWeek reports that 54% of U.S. manufacturers are finding it difficult to attract skilled workers to get the job done. That’s up from 38% before the pandemic. From a study by the Workforce Institute at HR solutions company UKG, pain points for employers include getting “ghosted” by workers who simply don’t show up for their shifts (a shocking 68% of manufacturers said they let employees go because of it between January and March 2021), high turnover and intense competition for skilled workers.

Strategy: Focus on retention and hiring

One of the best ways to win the talent war is to keep your people from walking out the door. Employee retention means focusing on their needs, their experience in your workplace, and their future. Promote from within. Provide your people with opportunities for increased training and upskilling, so they can learn and grow. Lay out career paths for your frontline workers who you think may be able to move up the ladder, so they can see the future with your company is about more than their current job. Involve them in the process when you’re looking at your operations with an eye toward greater efficiency. Another powerful way to boost your overall efficiency is to cross-train your people to do more than one job, so that when someone doesn’t show up for a shift, someone else can easily step in. All of this training and upskilling helps employees feel engaged. It lets them know you believe they are important to your company’s success.

When you do need to hire externally, cast your net wide. From the same Workforce Institute study, 62% of manufacturers have hired or considered hiring people with special needs, 56% have hired retirees, and 52% are considering hiring people who have been incarcerated. You may not have considered this talent pool in the past, but there are great advantages to hiring people who traditionally have trouble getting a break. Increased loyalty is a big one.

Challenge: Supply chain disruptions

This has been a major headache for manufacturers since the start of the pandemic, and it is still causing problems.

Strategy: Look at solutions to address time, pricing, production, inventory and information

According to David Newman, Supply Chain Practice Leader for USC Consulting Group, there are a number of tactics to use to combat supply chain disruption, but none are perfect. The most common and easiest to employ are the time solutions. Things like expediting freight (which is a supply-side response), or delaying order fulfillment (which is a demand-side response). But, if your customers have other options and they have low customer loyalty, delaying delivery dates can significantly reduce your revenues. Alternatively, premium freight if you have a low margin product can wipe out profits. Prices can skyrocket, and if you can’t pass those costs on to the consumer, it can erode your margins.

For more supply chain expert advice, watch Newman’s full video, “How to avoid supply chain disruptions” below as he shares his best insights for manufacturers to get around this vexing challenge.

Challenge: Inventory uncertainty

Supply chain disruptions naturally lead to worries about inventory. Manufacturers who have been committed to Lean methodologies have been tempted to stockpile inventory, just in case. But that’s a slippery slope that can erode your efficiency and margins.

Strategy: SIOP

It’s about adding inventory to your sales and operations planning process. It’s a powerful way to balance your inventory, achieving the optimal level between not enough and too much. Between just-in-time and just-in-case. It helps you settle back into Lean, eliminate waste and ramp up your efficiency.

The SIOP planning horizon should be at least a rolling 14-month period. We recommend that our clients update their plans monthly. Some do it more often than that. The point is covering a sufficient span of time to make sure the necessary resources will be available when you need them. The plans take into account projections made by the sales and marketing departments and the resources available from manufacturing, engineering, purchasing and finance. All of that together works toward hitting the company’s goals and objectives.

If you’d like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

Sales Inventory and Operations Planning eBook

2022 will present its share of challenges for manufacturing. To talk with the experts at USCCG about how to solve them, contact us anytime.

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Succeeding in the manufacturing industry today often means capitalizing on technology. As the sector grows increasingly competitive and technological innovations reshape historically inefficient processes, manufacturers must understand how technology can drive them forward. Computer Numerical Control (CNC) machining is one such technology.

While CNC machining dates back to the 1950s, it still holds vast potential for modern manufacturers. This technology is far more advanced than it was in the mid-20th century, and recent advancements have pushed its possibilities further. For those who haven’t yet, implementing CNC machining can bring considerable benefits.

What Is CNC Machining?

CNC machining uses computerized controls to cut and shape a piece of metal, wood, plastic, or other material. Instead of guiding the cutting or drilling edges manually, workers give the machine a pre-made digital design. The machine then follows this template to create an exact real-world replica of the original design.

Computer-Aided Design (CAD) blueprints give these processes remarkable accuracy and repeatability. Modern CNC machines have tolerances within the width of two human hairs and can repeat that accuracy indefinitely.

CNC machines come in various forms, serving multiple functions, including milling, drilling, and turning. They also come in varying sizes, prices, and numbers of axes.

How to Improve Manufacturing Processes

CNC machining can vastly improve material manufacturing workflows, but only with proper implementation. Here’s how manufacturers can use it to upgrade their processes.

Replace Manual Machining Operations

Since CNC machines can be expensive, effective implementation relies on applying them to areas where they’ll make the most difference. Often, this means replacing manual operations. CNC machines make fewer errors than humans and can create more pieces in less time, improving efficiency while reducing waste.

If facilities have multiple machining operations to implement CNC, they should aim for the most heavily manual first. Replacing as many manual processes as possible will result in the greatest time and cost savings, leading to quicker ROIs. More advanced, five-axis machines may even be able to create more complex designs than manual alternatives, creating new revenue streams.

Optimize Machine Maintenance

As with any piece of equipment, CNC machines will incur some maintenance costs over time. Manufacturers can make the most of these processes by minimizing these expenses and extending machine lifespans. The secret to this is to employ internet of things (IoT)-based maintenance schedules.

IoT equipment sensors can give warnings about failures before they happen, letting workers address these concerns earlier. That way, facilities will avoid costly breakdowns and maximize the life of these high-value machines. As a result, investing in these maintenance systems will help manufacturers fully capitalize on CNC machining.

Mitigate Labor Shortages

Another way manufacturers can use CNC machining to improve processes is by maximizing their available labor. Industry executives say it’s 36% harder to find talent now than in 2018, and there could be 2.1 million unfilled jobs by 2030. Since CNC machining requires fewer operators than similar alternatives, it can help mitigate this issue.

By applying CNC processes to their busiest workflows, manufacturers will free more workers to focus on other tasks. They can then accomplish more in the same amount of time with the same workforce.

Maximize Production

Since CNC machines are so efficient, they can let manufacturers increase their production output. Their need for fewer operators expands on this, letting workers focus on other parts of the workflow to sustain higher productivity. Readjusting workflows in this way to maximize production will make the most of CNC machining.

If manufacturers can run these machines close to full capacity, they can generate a positive ROI quickly. They may even find they can reach new production goals without adding more lines, keeping expansion costs low.

CNC Machining Offers Many Advantages

CNC machining today can vastly improve material manufacturing processes. When facilities understand its benefits and follow these steps, they can reach new efficiency, output, and savings benchmarks. With the right implementation, even a single machine can have a considerable impact.

If you need assistance setting up CNC machining in your workflows to maximize production, reach out to the subject matter experts at USC Consulting Group.

*This article is written by Devin Partida. Devin is a tech writer with an interest in IIoT and manufacturing. She is also the Editor-in-Chief of ReHack.com.

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