Industry Focus: Finance in the Manufacturing Industry

In the manufacturing industry, staying competitive means more than just producing quality products. It's also about enhancing every aspect of your operations. In this blog, we highlight the importance of finance in the manufacturing industry and how technology can help the industry streamline financial processes and propel the organisation towards efficiency.

What Is the Role of Finance in the Manufacturing Industry?

Since the manufacturing industry is about processing or producing goods, finance plays a role by guiding the allocation and use of resources. That way, manufacturing businesses can make the most of their products and optimise costs.

Finance Best Practices in the Manufacturing Industry

Finance best practices in the manufacturing industry help companies navigate through the complexities of finance management. Below are the finance best practices that propel growth and success in the manufacturing industry.

1. Document and simplify accounting processes

It’s crucial to document accounting processes, especially in an industry where accuracy and compliance drive smooth operations. Have detailed documents that outline your accounting processes to get an overview of how the business manages costs.

Simplifying the complex computations in your manufacturing business allows you to divert more attention to your projects. And the most effective way to simplify these processes is using software that eliminates manual data entry and calculations.

2. Optimise inventory management

Properly managing your inventory not only leads to an organised array of resources but also financial stability for the business as you rely on data-driven insights and analyses. Optimising inventory management also fosters better collaboration and communication with suppliers and other partners in the supply chain. 

Have regular inventory audits to identify stock that needs improvement and make strategic inventory changes.

3. Allocate resources

Proper resource allocation ensures that your operations have the necessary equipment and manpower to operate at peak efficiency. Effectively allocating resources allows manufacturers to minimise downtime and improve overall production output.

One way to achieve effective resource allocation is to leverage financial insights. When you have a deep understanding of the company’s financial health, you get to make informed decisions on your inventory and costs and allocate your manufacturing expenses and resources.

4. Streamline manufacturing processes

When you streamline your processes, you eliminate unnecessary steps, allowing for smoother and more efficient operations. Doing so allows manufacturers to produce more goods with the same or even fewer resources.

Also, streamlined manufacturing processes enable faster product development which allows your business to respond more quickly to changing demands and market trends. You can start by incorporating electronic tools and software to optimise production steps.

5. Use a finance software

Finance software for a manufacturing business offers a comprehensive suite of tools to streamline financial management, gain real-time insights and control costs. The right software will also help your business apply the best practices mentioned above, including inventory management and resource allocation. 

Automation in the Manufacturing Industry

Now that we’ve discussed the role of finance and its best practices in the manufacturing industry, let’s talk about something that will better help drive growth: Automation.

How does it work?

Automation in the manufacturing industry is the use of machines, software and other technology tools to perform specific tasks. It essentially increases efficiency to allow the business to do more with less effort.

It works by utilising systems and tools such as artificial intelligence and computer-controlled machines and software. Automation helps with performing repetitive or dangerous tasks, thus eliminating human labour.

Below are some examples illustrating how automation in the manufacturing industry works:

1. Centralised work processes — Automation allows the business to have a centralised software system where all processes and figures in the business work according to the same data. This streamlines operations and saves labour hours.

2. Business forecasts — Any manufacturing business must always stay on top of sales, costs and consumer demand. Automation uses algorithms to make business forecasts so you can control costs.

3. Customer satisfaction — We know that automation improves efficiency so, in turn, it also improves customer satisfaction. Automation can shorten delivery times and maintain the quality of products, providing customers with exceptional service.

What are the goals of automation in the manufacturing industry?

1. Solve the lack of skilled labour — The manufacturing industry often faces a shortage of skilled labour. According to a 2023 article from Matthews Intelligent Identification, “80% of employers within manufacturing are struggling to find people with the necessary skills to fill their vacancies.” And when employers do find skilled workers, the latter is still hard to keep. Automation solves this by minimising the business’s reliance on a skilled workforce and empowering the existing employees to develop new skills and take on more rewarding roles.

2. Optimise smart manufacturing — Smart manufacturing is a method that does certain steps of the manufacturing process by using robots, sensors and other technology tools. Automation optimises smart manufacturing by reducing the time required for manufacturing tasks and controlling quality parameters throughout the manufacturing process.

3. Prevent cybersecurity risks — Many manufacturing businesses outsource production, exposing the business to outside providers and increasing the risk of cybersecurity. Automation prevents these risks by carefully examining network security policies and procedures to ensure that they adhere to industry standards.

Automation ensures consistency and precision in manufacturing processes, leading to higher product quality and fewer defects. By automating repetitive tasks, the business’s decision-makers can significantly reduce operational costs, manage inventories and further contribute to cost savings. Automation also enhances customer satisfaction and brand reputation, driving your business to growth.