What challenges do manufacturing companies face?

Thread Content

　　What challenges do manufacturing companies face? Companies are the cells of a market economy and play an important role in driving national economic development. However, they currently encounter numerous challenges. Let’s take a look at those challenges faced by manufacturing companies.

1. Rising customer demands
Customers constantly exert pressure to improve on-time delivery rates. Determining the quantity and delivery date of products is a process that involves communication with customers. A slight difference in the quality rate of finished products—between 99.9% and 99%—can determine whether an order will be placed. Even in the absence of cost-cutting measures, customers still demand gradual price reductions over time.

2. Rapid technological changes
Products generate the highest profits in the early stages of production, but these profits decline rapidly as the product matures. Customers always want the most advanced products and are willing to pay more for them. Over 15% of sales revenue and human resources are spent on testing and experimentation. The manufacturing cycle is always shorter than the ordering cycle. It is necessary to continuously improve product designs to enhance performance and reduce costs.

3. Complex supply chains
The process of producing products, from component manufacturing and assembly to testing, involves a multi-level supply chain with complex relationships. To shorten the production cycle, these processes must be carried out simultaneously. Some processing steps need to be outsourced. There are also many different types and versions of products.

4. Unstable demand
More than two-thirds of sales come from just a few customers. Products must pass through manufacturers and distributors before reaching consumers, making it difficult to obtain accurate and real-time information about demand. Order changes and cancellations are common occurrences. Due to unreliable forecasts, it is necessary to keep large inventory levels to cope with fluctuations, which often results in waste of materials. 　　5. Globalized market: Customers come from all over the world, and demands exist 24 hours a day, 7 days a week. Companies cannot limit themselves to domestic suppliers when making choices. As businesses grow, it becomes necessary to establish production and sales facilities across the country and even around the world, as well as to enable two-way data exchange with other systems. 　　6. High capital intensity: Building high-standard factories and equipping them with advanced precision facilities requires substantial investment. Different products demand specialized molds, which are expensive. Equipment utilization is more important than material utilization. It is necessary to establish a reasonable product production mix in order to improve overall equipment utilization and maximize effective output