Jan 16, 2017 |  Supply Chain


Tackling OEM Challenges in 2017


In some industries, things are relatively stable from year to year. While manufacturing was done in much the same way for many years, emerging trends promise to change that. An original equipment manufacturer (OEM) must be resourceful and search for opportunities to stay competitive in an increasingly volatile market. While there may be challenges ahead, applying industry best practices will help any manufacturer operate at the top of their game.

Here are upcoming industry challenges that OEMs may face and standards that can be put in place to meet those challenges.  

Plan for Unpredictable Commodity Prices

The prices of nickel, copper and silver change frequently and inconsistently. Price unpredictability makes it difficult for OEM manufacturers to keep operating costs under control. Increasing commodity prices can directly impact a manufacturer’s bottom line, especially when product prices can’t be increased to offset manufacturer costs. OEMs can counteract rising prices by managing supply chain costs. Implement just-in-time production to respond quickly to changes in demand. Shortening supply chains can also lessen transportation costs.

OEMs should also be aware of how purchase decisions may affect the business down the road. Buying commodity in bulk comes with benefits and risks. If the cost of a commodity goes up after a bulk buy, the business comes out ahead. If the price goes down, the business loses.

Investing in substitutes may become necessary for some manufacturers. Copper prices have been historically volatile. If prices rise in 2017, manufacturers may need to find alternatives for copper and other expensive metals.

Manage Product Lifecycles

Successful OEMs require sophisticated equipment. But even the greatest equipment eventually runs its course. A product’s end of life (EOL) is defined as the final stage in a product’s existence. Manufacturers address EOL by discontinuing production of one product and developing another. A seamless transition from one product to another is key to ensuring minimal interruptions. Implement a product lifecycle management (PLM) program to manage the stages a product goes through from design to implementation to retirement.

Lean Means Greater Efficiency

What’s the best way to stay competitive in the face of volatile prices and retiring equipment? Constantly strive to increase productivity. Incorporating Lean manufacturing practices into your business is a sure-fire way to increase efficiency.

It all comes down to eliminating waste. Use 5S practices to manage OEM electrical inventory by establishing a clean, organized workspace. Standardize manufacturing to reduce defects. Keep your production lines running smoothly to avoid wasteful stops. Lean warehousing reduces errors, eliminates waste and increases storage density by standardizing inventory and creating visual controls. A more flexible supply chain starts with creating a better layout, design and storage for increased flow.

Invest in Inventory Management

Every OEM knows that having the right inventory on hand is vital. Invest in inventory management software to track inventory levels, sales and orders. This avoids costly out-of-stock issues. An inventory management program cuts costs by minimizing the number of materials on hand. Creating an efficient supply chain means better SKU visibility and accuracy. Managing inventory helps you save time and money on transportation, all while increasing flexibility.

Meet the Challenge

Upcoming trends in the OEM market can be a challenge for manufacturers. But by embracing Lean practices and establishing an inventory management system, OEMs will always have the equipment needed to stay ahead of the curve.

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