Good news! “Production jumped twice as much as forecast in July, signaling manufacturing is shouldering a U.S. economic recovery that is showing signs of moderating in the second half of the year,” according to the Bloomberg article “U.S. Industrial Production Rises More Than Forecast.”
In plain English, this means that the manufacturing industry is doing surprisingly well despite a weakening economy.
The article notes that fewer homes are being built because most potential homebuyers aren’t interested in going into debt while their job prospects are poor. On the other hand, more appliances, computers and cars were built in July to meet consumer demand. Total manufacturing in the United States grew by 1 percent last month, which beat most predictions.
What should we take away from this positive news? I suggest two things:
1. Cut Production As Demand Slows. One mistake that manufacturers can make is to keep producing at the same level, even though economic conditions have changed. There are legitimate reasons to slow down. If a manufacturer does produce more than it can sell, it will eventually have to deal with the added carrying costs of all those extra products. Flexibility is key here.
2. Use Manufacturing Inventory Software to Handle More Production. The report from the Federal Reserve showed that many parts of the manufacturing industry increased production last month. To keep their operations running smoothly, manufacturers should start using manufacturing inventory software. Manufacturing inventory software lets companies track orders, create work orders and bills of materials, and instantly update their inventory records with a barcode reader.
To learn more about how manufacturing inventory software can help you, schedule a Web demo of Fishbowl, the #1-requested inventory management solution for QuickBooks.