Manufacturing Company Management: Best Practices for Financial Functions

Jun 25, 2021 | Goals & Strategies

Small and mid-market manufacturing companies face a number of potentially complex issues. Like any manufacturer, strategic mindsets around raw materials, storage, uptime, vendor relationships, labor and distribution are all essential. But unlike larger manufacturers who might be more heavily resourced and capable of absorbing the occasional mistake or unexpected dynamic, the mid-market manufacturing company has to work smarter to avoid costly snags and inefficiencies.

People, Process, and Technology

It’s easy to chase the latest, greatest, shiniest tech solution that promises to solve all the manufacturing organization’s problems or keep things runner more smoothly. And certainly software, applications, platforms and innovation are critical for working smarter. But they’re only as good as the people who use them.

People

The first priority of smart manufacturing management is to enlist people aligned to the vision of the company, who understand the company’s objectives, and who can work well with others to carry out the vision. For leadership, this can mean:

  • Developing a culture with clear values. This makes hiring and retaining the right talent easier.
  • Surround yourself with complementary skillsets.
  • Surround yourself with people who can introduce positive tension.

Positive tension is introduced when the right skillsets combine with respect and trust. For many manufacturing leaders that can be the CFO or a financial person who sees a bigger, different picture than the CEO does. Disagreement and debate is encouraged. Seeing situations from all angles is imperative. Well rounded decisions are made and friction can help the work. Note that this positive tension doesn’t involve anger or frustration – in fact, no emotions at all are necessary. Positive tension is a function of objectivity. There’s healthy resistance in the ideation process in order to get to the fine details of agreement, making the vision of a company work.

Processes

Manufacturing company best practices have to involve standardizations. For scaling up to go smoothly and success to become sustainable, practices need to be predictable and repeatable. Start by developing baseline measurements in your organization so you can understand your plateaus and growth better. With that understanding you can better manage customer relationships, innovation or development and the competitive landscape. Some of those key performance indicators (KPI’s) should include:

  • Knowing your throughput and bottlenecks
  • A Pareto analysis can help you understand where issues are happening.
  • Marketing metrics like brand awareness or customer satisfaction help you see where opportunities exist.

Technology

Finally, it’s time to introduce the right technologies to support your people and processes. In addition to functional technology that helps your manufacturing company productively conduct its business, technologies can include:

  • An intranet or communications platform to encourage a culture of sharing and collaboration
  • A CRM (Customer Relationship Manager) to help connect market, sales, and distribution efforts aligned to the customer journey
  • An ERP (Enterprise Resource Planning) platform that helps all aspects of your organization function in a connected way, including to your accounting software

The CFO and You: Seeing the Big Picture

In any manufacturing company – including yours – everybody’s doing their job and they don’t have the ability to step back and see the whole picture. Even the owner or CEO, the visionary, doesn’t have that ability because they’re looking out further. This can lead to a kind of myopathy, where everybody’s focused on their singular perspective. You can have everyone doing their job and the job not get done.

Your CFO needs to know the business almost as well as the owner to help offer that essential positive tension and keep the big picture front and center. The right CFO, like ProCFO partners, is able to distill numbers and metrics, having seen them in other places, and leverage experience to improve people, processes and technology in your company.

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