NASHVILLE, Tenn.--(BUSINESS WIRE)--With some economic indicators pointing to increased uncertainty ahead, manufacturers would be well advised to firm up plans now to take advantage of the opportunities and address the challenges likely to face them in 2020.
Hiring, training and retaining a skilled workforce promises to continue being a key issue in 2020, as does optimizing the use of Big Data. The team of manufacturing industry experts at LBMC, the largest professional services solutions provider in Tennessee, sees five top areas where action is needed:
Act creatively to enhance the workforce
“One of the biggest challenges facing manufacturing in states like Tennessee is that the public perception of the industry has not caught up with the good news about its health,” said Jeff Otto, LBMC Manufacturing Recruiting Expert. Tennessee is ranked the 4th best state in the nation for manufacturing, with 350,000 people employed, or 11.5% of the workforce. Average wages and benefits for those jobs is $70,000 a year. Despite those strong numbers, manufacturers face significant recruiting challenges, because students are being steered away from careers in the field based on the outdated, inaccurate perceptions that jobs are low-pay and workplaces are dirty and dangerous.
One key to success is updating recruiting methods to match the gains elsewhere in the field. A great place for manufacturers to start is to use employees as ambassadors to the young people of their communities. The way to persuade them to be ambassadors is to make sure their work experience is optimized with such measures as providing outstanding, relevant training that keeps employees’ skills up to date. It is also critical to engage employees in helping management determine how to improve workforce well-being.
Optimize inventory cost management
While inventory accounting can be complicated for manufacturers, taking stock of your inventory is key to your bottom line. Often upper management is so focused on sales, HR issues and product innovation that inventory gets out of control. Take time to find efficiencies and increase security in inventory management and costing processes. Analysis of these controls can be vital in eliminating unnecessary procedures and streamlining systems.
Outsourcing to an expert who can help analyze margins, tightly control the count process, evaluate procedures, and ensure inventory count discrepancies are investigated early can be hugely beneficial in enhancing profitability as a safeguard for a most valuable asset.
If inaccurate inventory counts are a problem, take corrective steps as soon as possible. Lack of proactive measures may result in a loss of customers and reduced profits. Consult an expert who can provide industry benchmarks and calculate ratios to help minimize the guesswork in managing inventory.
Garner insights from Big Data analytics
It is no secret that Big Data is transforming manufacturing, just as it is many other industries. Here are four suggestions to maximize its power for manufacturing companies:
- Recognize that data will become one of the most critical assets a company can own in the next 10-15 years and treat it as such. It is critical that companies are capturing, curating, and securing data for current processes, transactions, assets, and business relationships.
Use data to take care of other assets critical to your business. For example:
- Predict maintenance required before machinery/equipment breaks down.
- Identify optimal machinery settings to produce the highest output.
- Predict demand and supply in your supply chain, manage resources and inventory, and optimize pricing and costing models.
- The Internet of Things (IoT) is real. Devices and sensors can track the health of equipment, environmental data, and other critical information in the manufacturing process.
- Invest in analytics. Be prepared to make significant investments in technology and people to make the most of the opportunities that analytics can bring. Cloud technologies can optimize spend, while outsourcing can be a good short and mid-term strategy to accelerate progress.
Take advantage of key tax credits
Now is a good time to evaluate your ability to claim the research and development tax credit, which rewards manufacturers for investments in developing new or improved products, processes, techniques, or formulas. Many small and medium-sized companies tend to underestimate qualifying activities, so it may pay to work with an advisor who can help you identify a potential credit, substantiate your claim and help you develop a strategy for utilizing the credits now and in the future.
Give close attention to new lease accounting standards
Most privately held companies will have to make sweeping changes in how they account for leases beginning in January 2021 under changes issued by the Financial Accounting Standards Board and the International Accounting Standards Board. The changes are complex and require new software to enable accuracy and efficiency. Getting ready for the switchover offers companies not only the opportunity to implement new policies and processes, but also to take stock of all their leases.
LBMC is a Top 50 firm in the country and the largest professional service solutions provider based in Tennessee, serving approximately 10,000 clients with diverse needs across a spectrum of industries. LBMC and The LBMC Family of Companies has more than 600 employees, serves clients in 50 states and internationally. Although founded in 1984 as a traditional accounting firm, Today LBMC has become industry leaders in financial, human resources, technology, information security, data insights and wealth advisory services. For more information, visit www.lbmc.com.