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Project based manufacturing

Project based manufacturing is different from other types of manufacturing, specifically engineer-to-order and manufacturing-to-stock. Unlike other forms of manufacturing, project-based manufacturing designs a product to be a product, before the needs of the consumer are considered. Manufacturing-to-stock and engineer-to-order both focus on putting the needs of the customer first.

Similar to other manufacturing, project-based manufacturing also keeps an inventory on hand. Typically the items are sub-assembled and then built on site. The main factor that drives project-based manufacturing is the revenue and profit stream. Companies that implement project-based manufacturing are normally looking for ways to increase their efficiency. Some of the common aspects of project based manufacturing include the following:

  • Creating maximum efficiency in a project-oriented environment.
  • Software that enables companies to access one specific project with one click.
  • Actual cost projecting.
  • Supply and demand outlook.
  • The value of a product based on its manufacturing cost, project costs, and actual revenue stream.
Customers of these companies usually do not need an estimate of how much the product will cost and they do not need it tailor-made to fit their needs. They simply need the product to fit within their budget means and suit their needs. Pre-made furniture items normally come from manufacturing companies that utilize project-based manufacturing. Companies that implement project-based manufacturing usually develop a product based on consumer trends and opinion. The initial product may be considered an engineer-to-order product because they are creating a product that was custom-made for a customer. Once they receive positive feedback, they start manufacturing the product for others.

There is a lot of pressure on companies to reduce costs. Keeping an eye on cash flow is a necessary part of project-based manufacturing. The product needs to maintain a high level of quality at the lowest possible price. Software companies also employ project-based manufacturing and design the software to the exact specifications of the customer. Once the software is designed properly, the business will receive payment for designing the product.

Cash management is an important part of project-based manufacturing. Since you are not paid until the customer receives the product, you need to have enough money to cover your business costs until you are paid. There is also a long lead time because the products are initially designed to meet the specifications of one consumer. In order to acquire customers, these businesses must provide accurate numbers to them. They must identify how much time it will take to design the product and then install it at the customer's facility. Even installing a smaller product, like software, can take a few days to make sure it is working properly. If you are shipping a product, it is important to have a good tracking system in place. You need to confirm the delivery of the product and discuss the installation of the product with the customer.

To find these customers, you must bid aggressively against your competitors. You must show the companies that you come with a low amount of risk and that you have a large customer satisfaction rating. The best way to win a customer is to give them an accurate projection of the costs. After you give them an accurate projection, follow it up with timeliness. If you can release your product to the customer close to the scheduled date, you will win over a customer for life.

Companies that have implemented project-based manufacturing often reduce their production costs by 30 percent of more. Their revenue costs increase by 35-50 percent and their customer satisfaction rating significantly improves. They also eliminate non-value adding processes and save thousands of dollars a year in manufacturing costs.

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