Mitigating Disruptions Amidst NAFTA Changes
By producing high-quality products, manufacturers can help make up for potential fluctuations in cost.
Manufacturers are battling price hikes in the wake of changing NAFTA demands and increased tariffs. As the world’s largest steel importer, the U.S. is facing higher production costs due to trading tariffs on steel and aluminum. Since Canada, Mexico and Brazil make up 43% of sourced steel for the U.S., manufacturers will have little choice but to pay the increased costs.
The tariffs make it incredibly difficult for manufacturers to ride the line between keeping costs low and customers happy. And it often falls on operations managers to make sure systems are up and running despite cost fluctuations. But the best operations managers strive to go unnoticed by their customers, as a seamless supply chain process should require little to no attention from them.
To successfully remain behind the scenes and ahead of the competition, operational managers can implement strategies to support some of the key factors of strong operations management, including cost, quality and delivery.
Competitive Costs that Reflect Value
It’s challenging to maintain competitive prices in the midst of tariff changes, especially when the U.S. lacks enough aluminum or steel to provide materials for domestic manufacturers to rely on. As a result, manufacturers must pay higher costs or risk falling severely behind on orders and shipments.
Manufacturers then have two choices: Eat the costs or pass them along to their customers. It’s a lose-lose situation.
To keep costs competitive and ensure they’re making the best decisions for their business, manufacturers should look at their immediate competitors. How are the tariffs impacting their costs? How are their customers responding? This will give manufacturers a good gauge as to what their customers are expecting and what they can afford.
Keeping this in mind, it’s also important to remember that costs should accurately reflect the quality of the product. There’s a reason a Cadillac costs more than a Chevy — people are willing to pay more for better quality, as long as the value is there.
Finding this happy medium may take a bit of trial and error, but ultimately manufacturers need to maintain healthy price points and consistent cost analysis in the midst of NAFTA changes.
Quality is King
It’s no secret that customers look for top-quality products and expect the best their money can buy. The good news it that changing NAFTA demands don’t have to affect the quality of materials manufacturers pay for. By continuing to produce high-quality products, manufacturers can help make up for potential fluctuations in cost.
With this in mind, how can manufacturers ensure they’re consistently delivering the best quality? The answer lies in fulfilling all customer product requirements through testing and measurement.
One way to set up a successful testing environment is to have it reflect a client’s actual usage, which may vary based on use cases for each client. This method ensures that the product is ready to be used exactly as the client needs it. For example, while a construction manager may use an embedded controller on a crane, a fleet manager may use the same device on a semi-truck.
Ultimately, it’s up to operations managers and their teams to make sure the testing and measurement systems are above and beyond expectations.
Remaining on Time
Businesses run on a set schedule, and they count on their vendors and suppliers to do the same. This is why on-time deliveries and scheduling is a key component of strong operations management. Removing delivery and logistic headaches for customers can help manufacturers demonstrate their value and stand out from competitors.
Minimizing interruptions, especially in a time when NAFTA demands are changing, is a core element of operations management. While customers have their own challenges to deal with internally, it’s important for operations managers to be on top of their game when it comes to logistics.
To do this, operations managers must be transparent with their customers. If an issue arises, it’s up to operations managers to rectify the situation and make customers aware of how long of a delay they can expect. This will help them adjust their business plans as needed to minimize disruption.
Although NAFTA changes have thrown a wrench in many companies’ business strategies, operations managers can make their customers’ lives easier by implementing operational efficiencies. Creating a seamless supply chain will not only improve operations, but it will help establish operation best practices and foster stronger customer relationships.