4Thought Blog

If you're like most manufacturers, you don't track order-processing. Yet focusing on this performance metric can identify operational inefficiencies that are cost-cutting opportunities. And continued monitoring lets you keep those costs in check and predict future outlays.

Customer order management means different things to different people. It may be limited to account processing and the activities involved in the entry, maintenance and fulfillment of orders. Some of the tasks include pricing, managing customer credit, checking parts availability, inquiring about order status, invoicing and processing accounts receivable. In other words, customer order management includes every process from order to payment receipt.

The impact of the U.S. Supreme Court’s decision in South Dakota v. Wayfair, now over a year since it was handed down, continues to reverberate throughout the business world. As the year wears on, it’s clear the decision carries implications for industries beyond retail and, indeed, for the very basic functions of any business with multi-state operations. Not understanding these implications can have significant financial consequences—failure to collect sales taxes on remote sales can result in significant tax assessments for the seller.

Industry 4.0 is shorthand for all the technological innovations fundamentally altering the manufacturing sector — including smart factories, the Internet of Things, cloud and hybrid computing, and augmented reality. Mobile devices are the gateway to Industry 4.0.

Manufacturing managers still working with decade-old computers — or pencil and paper — will likely be left in the dust. Optimally, your company should enable supervisors to dock smartphones for desktop work so they can fully embrace and leverage all the technological advantages available.

Mobility allows you to keep your finger on the pulse of your plant and gain enhanced, real-time visibility into many aspects of manufacturing, from supply chain logistics to enterprise asset management to customer order fulfillment. Mobile applications can help streamline operations and dramatically increase productivity by identifying and resolving problems faster and more efficiently.

On June 21, 2018, the U.S. Supreme Court issued a momentous decision that affects remote sellers and service providers across the country and the digital economy at large.

The Court’s South Dakota v. Wayfair decision allows states lawfully to require remote sellers to collect and remit sales and use taxes if they have an economic nexus, usually defined as a certain number of transactions and/or a minimum amount of revenue, with the destination state.

After South Dakota’s law was upheld, other states enacted similar laws. Today, 42 states have economic nexus for sales and use tax, some with enforcement deadlines approaching (Colorado, Pennsylvania, and Texas have enforcement deadlines of June 1, July 1, and October 1, respectively).

If 42 separate tax rates sound like a lot, try 16,000—that’s the ballpark of state and local tax rates in effect at any time. Adding to this administrative nightmare, tax rates can change on a monthly basis, generating as many as 600 to 700 changes throughout the year.

The latest technological innovation in manufacturing is likely coming to a plant near you — maybe even to your plant. It's the "automated warehouse." As technology, such as Big Data and the Internet of Things, improves other aspects of the supply chain, the traditional warehouse is undergoing radical changes. Manufacturers can't afford to ignore these developments.

Do you ever get an uneasy feeling that your purchasing system is out of whack? Are you concerned that expenditures are being made on your company's behalf that would never meet with your approval?

Finding an agreeable balance within a purchasing system can be a hard-won victory. Some manufacturers react by over-controlling expenditures without regard for how much money is lost when an executive invests an hour reviewing purchases of $100 supplies that are fairly routine.

The benefit of coming up with a workable purchasing system can usually be measured in savings. For instance, one manufacturer had several different locations -- each with its own approach to buying paper, pens and other materials at various local office supply stores. By consolidating purchases, the company saved 15 percent in expenditures.

In the current political climate, just about the only thing manufacturers can be certain about is continuing uncertainty. Everything from changes to foreign trade policies, to new tariffs, to military actions threaten to disrupt smooth operations in the manufacturing sector.

To complicate matters, there's no clear timeframe for when (or if) events will transpire. Already, manufacturers are coping with the rising costs of raw materials and subsequent pushback from customers with long-term contracts. For example, your firm may have been forced to find cost-effective alternatives or make certain concessions.

So what's the forecast? For most manufacturers, it's “wait and see.” However, you can take several steps now to weather the storm and minimize potential economic damage. These steps can also help position your company to benefit from any favorable conditions that may arise.

The term "lean manufacturing" means different things to different people. However, it can generally be agreed upon that lean manufacturing represents a management philosophy that emphasizes the elimination or reduction of waste in order to increase company profitability. In other words, doing more with less.

Lean manufacturing is often associated with the Toyota Production System (TPS) that helped catapult the car-maker into worldwide prominence. But some industry experts trace its roots back to the Industrial Revolution and Eli Whitney's systemization involving interchangeable parts. Others link lean manufacturing with the Six Sigma set of practices designed to improve processes. In any event, the TPS is often cited as a successful model for implementation of lean manufacturing principles.

Keeping that in mind, consider the following eight steps for applying lean manufacturing to your business operation:

Last year’s Wayfair decision is a momentous development in the debate over the digital economy’s responsibility for the collection of sales tax. As companies increasingly conduct business across state lines, how states and the federal government craft tax legislation that addresses the evolving definition of “nexus” significantly impacts all taxpayers—including manufacturers.

(Background: In June 2018, the U.S. Supreme Court ruled in the landmark case South Dakota vs. Wayfair that the “physical presence test” for determining if a seller is required to administer sales taxes is “incorrect.” States may now legally require sellers to administer sales taxes, even if the seller has no in-state physical presence.)

While many states offer manufacturers generous sales tax exemptions on certain equipment and machinery purchases, the industry is now faced with new sales/use tax rules that impact both purchase and sale transactions. The Wayfair decision has important business implications manufacturers can’t afford to ignore—lest they wind up with a hefty tax bill they didn’t plan for.

If your company would like to tackle the international market, it's time to evaluate your chances of success.

Manufacturing firms that successfully make the leap generally tend to have a firm domestic base, strong reputations and a quality product. A solid track record is also essential before expanding abroad.

But there's more to it than that. Before taking on the world, realistically examine how your skills and resources fit into a highly competitive global environment. Here are five points to consider: