Monday, June 25, 2018

Diverse mattress sales channels call for diverse manufacturing systems

"... Party City announced on Monday it plans to open 50 pop-up toy stores throughout the country from September through the holiday-shopping season. The announcement comes ahead of the Friday deadline when all Toys 'R' Us locations are expected to close.  The new temporary stores will be called ‘Toy City’ and will coincide with the company’s Halloween City pop-up stores in a variety of locations across the country..." (read the full Fox Business story here: https://www.foxbusiness.com/features/party-city-looks-to-become-the-next-toys-r-us)

Niche business models like this may be the way forward for bricks and mortar retailers combating online sales. A seasonal pop-up store may not work for everybody, but clearly every traditional retail category is being challenged by online sales, and it's going to take some creative business structure changes to deal with it.

Ironically, as bricks and mortar mattress retailers are playing catch-up to offer online goods, many online start-ups are now rolling out physical stores to reach more shoppers. Everybody wants to have their cake and eat it too!
GSG can provide hyper-efficient, flexible mattress manufacturing throughout your plant.
Square pegs don't fit round holes
As your retail channels diversify, it demands that your mattress manufacturing must become more sophisticated too. Diversifying sales outlets put a lot of strain on your supply chain and your manufacturing systems built for your traditional sales channels. It takes hyper-efficiency, and, more importantly, flexible production to compete in multiple sales worlds. Each channel has different demands to operate effectively.

Toys 'R Us was built for a different era of shopping experience, but today's shopper is building their own shopping experience. If you're going to stick with your traditional sales methods, hang in there! GSG will be there for you, just as we always have been. But if you're ready to try some alternative business models, GSG has many new, innovative systems to help you adapt.


Friday, June 1, 2018

Unit Labor Costs suck profits from mattress manufacturers - and it may be getting worse!

Here are some highlights from today's US Bureau of Labor press release regarding the American employment situation...

"... Total nonfarm payroll employment increased by 223,000 in May, and the unemployment rate edged down to 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several industries...
  • Manufacturing employment has risen by 259,000 over the year, with about three-fourths of the growth in durable goods industries. 

Good news for the American worker; wake-up call for the American manufacturer.
More Americans are enjoying better incomes, and hopefully the American manufacturer can benefit when the population spends that extra money on manufactured products - like new mattresses!

But as we've pointed out many times in this blog, as the pool of available workers shrink, labor costs will increase. Employers are forced to increase wages to attract ideal applicants, and keep existing employees from jumping ship for a higher paying job at a different business.

This impacts two key areas of your profitability: Unit Labor Costs (the labor cost to produce one unit of your manufactured product) go up, and Productivity (the amount of value produced per employee) goes down. That's not a good scenario for manufacturers like you.

As explained in a another recent BLS report regarding 2017 Manufacturing Productivity Costs, "... Employers experience increased unit labor costs when hourly compensation growth outpaces productivity growth. Unit labor costs increased in 19 of the 21 manufacturing industries, as hourly compensation growth outpaced that of productivity..."

Based on this most recent May report, Productivity Costs may be worse for American manufacturers in 2018 if employment trends continue this trajectory. 

Efficiency trumps Unit Labor Costs
To combat rising labor costs, you need to cut out waste, and produce more value per employee. Handling and disposing of material scraps from cut and sew operations in the mattress factory is a total drain on profitability! It adds no value to your product, and sucks money right out of your operations. GSG now offers a vacuum-powered automatic waste disposal system from Waste-exit. It literally sucks waste out of your mattress production.




Check out this video see this amazing system at work
and
learn more at our website.

Eliminating the waste is the low hanging fruit for improved efficiency, but there are many other areas to improve upon and GSG has solutions for every area of your mattress plant. Click here to see more new hyper-productive equipment from GSG.