Seem Like Production Cools Off When The Mercury Drops? You May Be On To Something

You haven’t closed the books on the month yet, but you have a hunch the cold weather has impacted your ability to produce and sell?  You can’t put your finger on it, but production is lower than expected, and you’re certain the books will reflect this downturn when it comes time to close the books at the end of the month. What happened?

“Where’s My Order?” A Logistics Nightmare.

As a consumer, most often a delayed shipment is an inconvenience, but in manufacturing, a delayed shipment can set off a chain reaction of delays; from lost productivity to a missed customer delivery, to a potential reduction in profit margin or canceled orders if contracts include a Timely Delivery clause.

Is your business located in a temperate region?  You’re not immune to Winter delivery woes.  A swing in the weather in a port or hub region slows the entire chain, so unless your materials are locally sourced, you might experience a pinch as well.  Be it a chance Fall hurricane in port cities in the Gulf or Winter ice storms in the northern states, your supply chain will likely feel the impact of regional weather conditions.

The Human Element

Industrial Automation is on the rise, with a global factory automation installed base of roughly 2% in 2017 and projections of 3.5% by 2020.  Few factories are fully-outfitted with robotics and still depend on factory workers throughout the fabrication and assembly process. The problem? Dexterity.

If you’ve ever walked through a Wisconsin factory in January, you know how drafty a large, open warehouse with loading dock can be.  Performing intricate tasks with either frozen hands or winter gloves takes more time, reducing the production rate. The more precise the task, the greater the impact.  Similarly, a drafty or uncomfortable work environment can lead to more worker sick days, both decreasing productivity and increasing costs.

Rising Commodity Costs

Regardless of your dependence on factory labor, costs often rise in Winter months: be it fuel and oil for transportation and manufacturing or a spike in utilities for heating your facility. Running an automated factory and considering lowering the thermostat?  Depending on the equipment type and extremity of outside temperature, you may run the risk of additional wear-and-tear on the machinery or pipes freezing halting operations.

Don’t Be A Casualty Of Climate

As margins thin and production becomes more laborious and cash flow runs thin, closing up shop for a few months can be a tempting prospect, however your contributions—be they meager or robust—matter to the local and global economy.  Let us help.  Our cash flow solutions can keep your business humming through the harshest Winters; offering invoice financing, payroll funding, and revolving facilities at competitive rates to keep your doors open and you from overextending your business with loans.  Contact ENGS Commercial Capital today to learn how we can help move your company forward.