Resources
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Manufacturing Monitor
Winter 2012 l Fall 2011 l Summer 2011 l Spring 2011 l Winter 2011 l Fall 2010 l Summer 2010 l Archive
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When done correctly, outsourcing can save manufacturers money and allow them to focus on their core business functions. But it’s important to consider the decision from a strategic and financial standpoint. This article lists questions to ask when deciding whether to outsource, what costs to consider when crunching the numbers, and some of the risks involved. A section offers some tips for getting the most out of outsourcing if the decision is made to go ahead. 
Using sophisticated inventory management software is supposed to solve the problem of inaccurate counts, but that’s not always the case. Delays in order fulfillment and angry customers are inevitable when a warehouse is plagued by erroneous inventory counts. This article describes a variety of steps to improve inventory accuracy, including the implementation of cycle counting. 
Can manufacturers reduce their payroll taxes without shedding employees? It may be possible if they implement certain strategies that can trim their tax burdens and boost their balance sheet. This article offers three such strategies: offering tax-exempt fringe benefits instead of more money; establishing an accountable plan for employee reimbursements; and using independent contractors when possible. 
Dealing with waste often is a costly and frustrating issue for manufacturers, but it doesn’t have to be. This article shows how avoiding waste creation, finding new ways to reuse waste, and making waste smaller can help manufacturers manage it more efficiently, greening their operations while also saving money. 
“Transfer pricing” refers to the price that related parties, such as divisions of a company, charge one another for goods or services. With revenue-hungry governments worldwide looking to keep their tax bases strong, many are stepping up enforcement on transfer pricing. Manufacturers that don’t follow the rules can be taxed twice on transactions, and face hefty penalties to boot. This article looks at “arm’s-length” requirements for transactions between related parties, along with common audit triggers. A section examines advance pricing agreements for related-party transactions. 
A warehouse management system (WMS) can increase efficiency and productivity for distributors, but successfully installing a WMS requires extensive planning and a fair amount of financial resources. This article explains the advantages of a WMS, but also notes that setting up and operating this application is often a complex process that may preclude some distributors from being able to justify the initial, often sizable, investment. A section explains why a business management system can maximize the return on investment in a WMS. 
For manufacturers, establishing a retirement plan makes their company more attractive to potential hires and translates into tax benefits. And the IRS has provided several recent initiatives to encourage participation among employers and employees. This article discusses the features of defined-benefit plans and defined-contribution plans and how to maintain a plan once it’s in place. 
A conveyor is one of the most vital pieces of manufacturing equipment — and one of the most expensive. But the cost goes well beyond its initial price tag, because installation, maintenance and energy usage also chip away at the bottom line. This article explains how a manufacturer can buy a conveyor that meets its needs, and why maintaining it properly can extend the system’s life and save money. It also describes current tax deductions that can shave additional dollars off a conveyor’s cost. 
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 includes incentives designed to jumpstart spending and free up cash for businesses. This article takes a closer look at three provisions that could benefit companies: bonus depreciation, Section 179 expensing, and the Work Opportunity credit. A sidebar discusses the extension of the research credit through 2011. 
There are myriad reasons to conduct a business valuation. The main reason is in preparation for selling a manufacturing or distribution business. But knowing the company’s value can be helpful when doing succession and estate planning and for other business-related reasons. This article explores those reasons and the four valuation methods commonly used. 
Many developing countries have seen their economies expand in recent years, creating a prime opportunity for manufacturers to expand their customer bases. This article lists options for capturing customers in emerging markets, and discusses the pros and cons of each approach. It also explains steps companies should take in advance of expansion. 
The IRS has relaxed its policies on liens, which are claims that the federal government puts on the assets of delinquent taxpayers. The new rules make it easier for “small businesses” to set up payment plans for back taxes and, ultimately, have their liens withdrawn. This short article looks at some of the details. 
Nominations are now available for the Pittsburgh Business Times' 2011 Manufacturer of the Year Awards. The deadline for submissions is August 29, 2011. The presenting sponsor for this program is Alpern Rosenthal. Sponsors include SMC Business Councils, Tucker Arensberg, Zoltun Design and Desmone & Associates Architects. These awards will honor manufacturing companies in three categories - small, medium and large. 
One line item that appears in every manufacturer’s budget is likely to increase in 2011: unemployment taxes. Continued high unemployment means that state-run unemployment trust funds have been decimated in a growing number of states, and many are socking businesses with eye-popping tax increases to keep their systems afloat. Because either an upward or downward change in a company’s workforce could affect their employment tax liability, this article provides a primer on the essentials of unemployment insurance and what may be in store. A sidebar offers five strategies to help companies ease their unemployment tax liability. 
During slow periods, manufacturers scale back production. But reducing costs means cutting capacity, which shrinks potential for profits and can leave a company hurrying to catch up when demand returns. Rather than focusing solely on cost cutting, companies should look to optimize their capacity. A capacity utilization approach can balance operating expenses with product demand, trimming only unnecessary costs and identifying where additional resources are needed. This article offers ways to both streamline expenses and increase market share so as to increase capacity utilization. 
It’s crucial to maintain a fresh product portfolio. Even though some manufacturers may be skittish about launching new products in a slow economy, they can keep companies afloat in shaky times. In fact, one market researcher estimates that new products have a 20% profit margin advantage compared to older products. This article offers four tips for planning in advance of new product development. 
A successful distributor must be able to reduce overall costs and cut its time to market, all while improving the quality of its delivery. This article shows how to achieve these goals by taking the practice of lean logistics management and mating it with Six Sigma process improvement methodology. 
In the wake of recent economic uncertainty, many manufacturers are exploring their banking options. Larger institutions are known for offering lower interest rates and more capital. But recent mergers have given smaller, community banks ties to larger institutions and therefore access to more funding and services, while still offering more one-on-one interaction with loan officers. This article explains that the right bank will understand the manufacturing industry and be able to suggest useful services. A section shows how the 2010 financial reform will affect banks and their relationships with their manufacturing clients. 
Accurately forecasting the demand for seasonal merchandise isn’t easy. However, distributors can better plan the boom and bust cycle of seasonal inventory by studying historical sales data, forecasting future demand and considering the unexpected. This article shows how — and what to do when, in spite of one’s best efforts, an excess of inventory remains. 
For most manufacturers, energy efficiency has become a must-do measure. However, while instigating a large-scale energy reduction plan may seem daunting, there are ways to make the process easier — and well worth the effort. This article shows how manufacturers can not only determine current energy usage, but employ a third-party energy audit to discover specific measures to reduce usage. 
The shift toward implementing environmentally friendly business practices is nothing new among manufacturers. And now, they’re turning to sustainable packaging as the latest way to go green — not only because it reduces waste, but also because customers are demanding it. This article describes some of the basic steps involved in making the switch to sustainable packaging. 
Lean manufacturing is nothing new, but many don’t know that lean accounting is crucial to operating in a lean manufacturing environment. Lean accounting focuses on two goals: 1) converting financial statements into “plain English,” and 2) eliminating waste by taking the focus off the minutiae. This article describes some of the advantages of lean accounting vs. standard cost accounting, along with some of the disadvantages. A section discusses the status of lean accounting in university curricula. 
Reshoring — the act of bringing operations back onto U.S. soil — is a reaction to the myriad problems manufacturers have faced in foreign countries. This article looks at some of the specific reasons for this trend, and examines the considerations involved in determining the costs of manufacturing overseas vs. in the U.S. A section discusses the recent rise in popularity of seminars, webinars and other events on this subject. 
In the distribution industry, accurately identifying and tracking inventory is job number one. There are two types of technology to perform these tasks: bar codes and radio frequency identification (RFID). But which technology type is right for a particular distribution company? This article looks at how each works and explains their respective pros and cons in regard to such issues as cost, convenience, security and privacy. 
Layoffs, hiring freezes, and pay and budget cuts were the go-to survival tactics during the economic downturn. In the midst of this downsizing frenzy, many manufacturers neglected to reassess their pricing strategy. Doing so can help companies remain profitable and competitive in good times and bad. This article briefly discusses the steps involved. 
In September the Small Business Jobs Act of 2010 (SBJA) was enacted and signed into law. In addition to the targeted small business group, many provisions of the Act will be of interest to manufacturers. Among these are enhanced depreciation and expensing rules that are aimed to stimulate investment in capital assets. 
In this fragile economic environment, several companies have been able to take advantage of too-good-to-pass-up deals in which they acquire weaker competitors that have fallen behind. Before jumping into any acquisition, however, it’s important to build a solid integration plan, and to take into account recent Financial Accounting Standards Board guidelines that affect the M&A accounting process. A section in this article forecasts M&A activity. 
The economy may be recovering, but some businesses may require additional financing to keep operations running. Three important options are asset-based financing, mezzanine financing, and Small Business Administration loans. This article explores some of the details of each. 
Manufacturers are increasingly involving senior financial executives and outside financial advisors in their site-selection and relocation plans. The reason? Executives realize that facility relocation and expansion must be as heavily scrutinized as other capital expenditures. Factors such as the price and availability of labor, taxes and financial incentives associated with the new location can either benefit a bottom line — or wreak havoc on it. 
The cost of a recall — including the time and money spent tracking down recalled products, issuing news of the recall, and refunding customers or fixing the problem — is just the beginning. Even when recalls are handled well, damage to a company’s reputation and brand can last for months or even years, resulting in decreased sales and profits. This short article provides tips on how to avoid recalls, and how to handle them if they occur.