{"id":5878,"date":"2017-05-30T07:48:24","date_gmt":"2017-05-30T14:48:24","guid":{"rendered":"https:\/\/blog-prod.qad.com\/blog\/?p=5878"},"modified":"2026-02-17T09:19:28","modified_gmt":"2026-02-17T17:19:28","slug":"contract-manufacturing-jedi","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2017\/05\/contract-manufacturing-jedi","title":{"rendered":"Could You  be a Contract Manufacturing Jedi?"},"content":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;5879&#8243; img_size=&#8221;full&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<span style=\"font-weight: 400;\">What if I told you you had the potential to be a Jedi, if you could only learn to tap into the full capacity of your mind? Well, you can&#8217;t because Star Wars is fiction, but your <a href=\"https:\/\/www.qad.com\/solutions\/manufacturing-erp\">manufacturing<\/a> set up is not fiction. <\/span>Poor <a href=\"https:\/\/www.qad.com\/blog\/2018\/10\/metrics-matter-capacity-utilization-throughput-ratio\">capacity utilization<\/a> is a common challenge for contract manufacturing organizations (CMOs). If you have 10 manufacturing sites and are only using half on a weekly, monthly, or annual basis, then your utilization rates are low. Industry best practice points to 70 percent utilization rates or higher, yet, it\u2019s common for CMOs to report utilization rates in the 30-40 percent range.<a target=\"_blank\" href=\"http:\/\/www.mckinsey.com\/~\/media\/mckinsey\/dotcom\/client_service\/operations\/pdfs\/outlook_on_pharma_operations.ashx\" rel=\"noopener\"><span style=\"font-weight: 400;\">McKinsey research found that \u00a0solid dose \u00a0manufacturers were, on average, using only 25 percent of their total capacity.<\/span><\/a><span style=\"font-weight: 400;\"> Underutilization is so prevalent that, according to McKinsey, the pharma industry \u201ccould shut down three out of four plants today and still meet demand.\u201d<\/span><\/p>\n<h2>Why is Your Capacity Underutilized?<\/h2>\n<p><span style=\"font-weight: 400;\">Poor capacity utilization can result from equipment shutdowns, untrained operators or incorrect materials. Some production runs might need specialized staff who are unavailable at the point of production. In fact, shortage of skilled labor in manufacturing is predicted to be a persistent and growing problem for the foreseeable future.<\/span><a target=\"_blank\" href=\"http:\/\/www.themanufacturinginstitute.org\/~\/media\/827DBC76533942679A15EF7067A704CD.ashx\" rel=\"noopener\"> <span style=\"font-weight: 400;\">According to Deloitte &amp; The Manufacturing Institute, Over the next decade, nearly three and a half million manufacturing jobs likely need to be filled and the skills gap is expected to result in 2 million of those jobs going unfilled.<\/span><\/a><span style=\"font-weight: 400;\"> However, customers don\u2019t see the complexities of operations. To them, these are just excuses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Inefficiencies associated with capacity underutilization can have a significant impact on profitability. When agility is low and turnaround times are at risk, financial metrics are also in jeopardy. Consider the impact on return on invested capital when more than half your equipment sits idle. You have mixers, blenders and dryers go unused 60 to 70 percent of the time.<\/span><\/p>\n<h2>What Can be Done About a Contract Manufacturer\u2019s Underutilization?<\/h2>\n<p><span style=\"font-weight: 400;\">The good news is that technological advances combined with smarter supply chain practices might solve these problems.<\/span><a target=\"_blank\" href=\"https:\/\/goo.gl\/vTXSM4\" rel=\"noopener\"> <span style=\"font-weight: 400;\">Some companies, are addressing the issue by adjusting their product mix and divesting several sites.<\/span><\/a><span style=\"font-weight: 400;\"> Another solution is the ability to schedule operations on a more granular level. For many companies that might not be an option because of broken processes that keep them from scheduling to the degree necessary to utilize capacity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whatever corrective actions a company may choose, they need the data to determine what those actions are. With the Internet of Things (IOT), <a href=\"https:\/\/www.qad.com\/solutions\">Enterprise Resource Planning<\/a> (ERP) and Manufacturing Execution Systems (MES), all collecting and communicating data, there will be many ways to go about improving capacity utilization. Historically, acquiring visibility down the production line has been a challenge. Legacy systems weren\u2019t designed to talk to one another, but companies need them to because they\u2019re basically Franken-companies, made up of smaller companies put together into one through M&amp;A activity and divestitures.<\/span><\/p>\n<h2>Help is Out There: Become a Contract Manufacturing Jedi<\/h2>\n<p><span style=\"font-weight: 400;\">Capacity planning isn\u2019t the easiest thing to nail down. Fortunately there\u2019s software that can assist you in solving your planning and scheduling problems. Improve your capacity utilization, integrate systems for greater organizational visibility and restore declining profitability.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the right technology on your side, you can tap into your full capacity and maybe even become a manufacturing Jedi. <\/span><a target=\"_blank\" href=\"https:\/\/go.qad.com\/NA-US-FY17-NUR-LSCMO_01-Infographic.html?utm_source=blog&amp;utm_medium=post&amp;utm_campaign=na-us-ls-cmo&amp;utm_content=bp-info-jedi\" rel=\"noopener\"><span style=\"font-weight: 400;\">To learn more about the operational challenges faced by contract manufacturers, check out our infographic<\/span><\/a><span style=\"font-weight: 400;\">.<\/span>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;5879&#8243; img_size=&#8221;full&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]What if I told you you had the potential to be a Jedi, if you could only learn to tap into the full capacity of your mind? Well, you can&#8217;t because Star Wars is fiction, but your manufacturing set up is not fiction. Poor capacity utilization is a common challenge for contract manufacturing [&hellip;]<\/p>\n","protected":false},"author":36,"featured_media":5879,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,199,1],"tags":[9,294,15,16,112,18,23,24,295],"class_list":["post-5878","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-manufacturing-trends","category-uncategorized","tag-cloud-erp","tag-contract-manufacturing","tag-enterprise-resource-planning","tag-enterprise-resource-planning-software","tag-erp","tag-erp-software","tag-life-sciences","tag-manufacturing","tag-pharma"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Could You be a Contract Manufacturing Jedi? - QAD Blog<\/title>\n<meta name=\"description\" content=\"Poor capacity utilization is a common challenge for contract manufacturing organizations (CMOs)...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wp-admin-prod.qad.com\/blog\/2017\/05\/contract-manufacturing-jedi\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Could You be a Contract Manufacturing Jedi? 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