During the red-hot demand manufacturers experienced during the COVID-19 pandemic, focusing on immediate challenges and priorities was natural. However, now that the market has cooled, many manufacturers feel the effects of a decrease in demand. Now, more than ever, it’s critical to consider long-term strategies for success.
The best way to future-proof your company is through automation, and there’s no better time to implement it than when some extra capacity and resources are available. In this article, we’ll explore how manufacturers can use this period of slower demand to set themselves up for success in the future. We’ll examine how manufacturers thrived during the last demand spike and how a slowdown allows manufacturers to automate. Finally, we’ll discuss how VersaBuilt helps manufacturers automate and future-proof their production processes.
Who Succeeded During the Last Demand Spike?
During the last period of high demand, manufacturers faced various challenges that tested their operations and supply chains. Labor was scarce and expensive, as many companies competed for a limited pool of skilled workers. Material costs also spiked to all-time highs, making it difficult for manufacturers to secure the raw materials needed to keep up with demand. Customers were placing huge orders in an effort to offset availability issues by padding their inventory. Demand quickly outstripped production capacity, and many manufacturers couldn’t fill orders rapidly enough.
In this environment, a key differentiator for those manufacturers that succeeded was that they were less susceptible to labor cost and availability fluctuations. Some manufacturers with the raw materials couldn’t fulfill orders fast enough due to a lack of labor—those that could, were paying sky-high rates for machinists’ and operators’ services.
Automation played a vital role in these companies’ success, allowing them to keep running even with thinner labor availability and still reach high production levels with healthy margins. Automation helped these manufacturers remain competitive despite their challenges and ultimately enabled them to emerge stronger from the period of high demand.
A Slowdown in Demand Provides Opportunities for Manufacturers
The current demand slowdown in manufacturing presents a unique opportunity for companies to reevaluate their processes and explore new strategies, workflows, and technologies. Many manufacturers took some time to catch up after the record demand of the past couple of years when inventory was low, and there wasn’t enough labor to go around. Now, these same companies are experiencing whiplash into a situation with too much inventory and labor. This allows manufacturers to experiment with new approaches and fine-tune their processes before replicating these findings throughout their facilities.
This slower demand period is a prime time for manufacturers to invest in automation. After a period of intense demand, you’ve hopefully booked some profits. This provides an opportunity to consider some new investments. Many manufacturers might consider expanding their fleet of CNC machines to hedge against availability issues for future periods of high demand. However, those that will thrive in the future prioritize investing in automation first instead of solely focusing on new machines. These manufacturers understand that more machines will make them more dependent on labor. Automation allows you to be more flexible in the face of fluctuations in labor availability in the future and can improve profits and capacity in the short term. When the next demand curve comes, companies that have automated will be able to respond much better than those that didn’t.
How a manufacturer develops a process during the first 3 to 6 months after automating will likely define that process for the next 10-15 years. This makes slowdowns in demand a crucial time for manufacturers to invest in automation and position themselves for long-term success.
How VersaBuilt Helps Manufacturers Future-Proof their Facilities
VersaBuilt provides automation solutions to supplement machinists and operators to increase productivity and efficiency and lower applied labor costs. This people-first approach allows manufacturers to increase the effectiveness of their people, not just their machines. Manufacturers can free their skilled workers to focus on higher-value activities by automating specific tasks and processes. Additionally, VersaBuilt systems enable operators to manage more machines than they could before implementing an automation system while maintaining high production levels.
A typical VersaBuilt customer will achieve double and sometimes triple the production output per CNC machine with about half the labor. For example, a mid-sized machine shop might have 30 machines and 15-20 people per shift. Most companies can run this shift with just 5-7 people if automated with a VersaBuilt system. Furthermore, when you consider second and third shifts with an additional 15-20 people per shift versus an automated facility needing only 5-7 people per shift, you can see how the labor costs begin to increase significantly. As a result, the VersaBuilt systems provide a significant potential for scale and cost reduction–critical advantages for companies during periods of high demand.
The additional capacity provided by the higher production rate makes it easier for companies just beginning to automate to continue automating in the future. When you’re already behind, or demand is high, taking equipment offline to develop a new process can be difficult. In addition, high demand means increased pressure on decision-makers, machinists, and operators. Pressure to deliver tends to make people more risk-averse. In this context, this means that when manufacturers are feeling the heat, they’ll be less likely to take a chance on something new–even if something as powerful as CNC automation is the exact thing they need to relieve that pressure. The extra capacity offered by a slowdown in demand gives companies a chance to take some machines offline temporarily for integration without disrupting their overall production. By automating their facilities, manufacturers can future-proof their operations and be better prepared to respond to the next wave of demand.
How did you fare during the last demand spike? Are you prepared to keep up with the next wave of unpredictable demand and labor shortages? VersaBuilt’s automation solutions help manufacturers stay ahead of future demand and labor challenges. Our automation systems are built by machinists for machinists and allow you to increase efficiency, reduce labor costs, and meet even the most demanding production goals. Contact us today to learn more about how we can help your manufacturing business thrive.
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