This is not another article on how artificial intelligence (AI) and machine learning (ML) are transforming manufacturing. Day after day, your inbox and media feed are probably full of them. As is the case with many trending stories, it’s hard to tell what’s actually happening versus what’s expected to happen. I’m hoping this article provides a little perspective so Small and Medium Businesses (SMBs) in the manufacturing space can stop feeling like they’re the only kids on the block without the latest I-phone.

Don’t get me wrong. The transformative capabilities and potential uses of AI and ML in the manufacturing space can’t be over-stated. AI/ML should absolutely be an ongoing strategic consideration for all manufacturing business leaders.

In January, the World Economic Forum’s article “6 ways to unleash the power of AI in manufacturing”  acknowledged: “The global AI in manufacturing market is valued at $3.2 billion in 2023 and is poised to grow to $20.8 billion by 2028. Yet, despite these possibilities and significant investments, manufacturers are not harnessing the full potential of AI.”

This sentiment was echoed in a recent blog article published by the American Society of Mechanical Engineers. While discussing AI as the industry’s key to future growth and profitability, the article acknowledges, “The uptick in usage has continued to be slow as well as uneven.” (Cecere, Cathy. March 6, 2024. “Manufacturing in 2024 Means Embracing AI.” ASME.org.)

After doing some research, I found this undercurrent of discussion about actual AI/ML use is starting to make its way into the media mainstream. It appears that while the biggest businesses and companies developing AI solutions are making the most progress and largest investments in AI/ML applications, SMBs in manufacturing should not just consider closing shop because they don’t have the knowledge, finances, or ability to make big leaps into the AI/ML arena right now.

It’s hard to tell what percentage of manufacturing companies – especially SMBs – are actually deploying AI/ML solutions today. Survey results from different sources run the gamut, indicating less than 4% of businesses are using AI/ML to produce goods and services to stating more than half of SMBs are playing in the AI/ML arena. One survey shows about 30% of large companies are using AI/ML and another shows less than 20% of global manufacturing companies use AI/ML on the plant floor.

Rather than trying to keep up with the Joneses, it feels like a good time to level set what manufacturing SMBs can actually do with AI/ML today and how to plan for the future. At this point, staying knowledgeable about what’s available, what’s coming, and use cases is vital.

Consider how AI/ML can address pain points in your business. Begin seeing how free AI apps can help you with a variety of everyday tasks, from marketing to scheduling, tracking receipts for expense reporting, and more. And, if you can, take advantage of AI enhancements to your current systems, equipment, and operations, explore where it makes the most sense.

The U.S. Chamber of Commerce has some information about small business use of AI. The U.S. National Institute of Standards and Technology (NIST) points out that, among other things, the Manufacturing Extension Partnership offers resources to “help you understand what technologies exist and if they are a good fit for your business,” with experts available to help you “establish an adoption strategy, scope the project, align suppliers with vetted resources and manage implementation to ensure your business goals and customer needs are met.” To learn about the NY MEP, click here.

As you’re considering how AI/ML will impact your business in the future, please remember RBT CPAs is  available to meet all of your accounting, tax, audit, and advisory needs. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

In an ever-evolving business landscape, the importance of succession planning, particularly in manufacturing businesses, cannot be overstated. An unexpected or unplanned for departure of a key employee can be devastating to a company’s productivity, reputation, and business. Proactively protect what you’ve built by making succession planning an ongoing part of doing business.

Succession planning is a strategic process that ensures business continuity by identifying and developing potential successors for key positions, thereby mitigating the risks associated with unexpected absences, departures, or retirements.

In the realm of manufacturing, the stakes are even higher as these businesses are often highly specialized, with unique operational nuances and specific skill requirements. This sector thrives on stability and predictability, and unexpected leadership gaps can have a disruptive impact on production, client relationships, and overall business performance.

Succession planning involves forecasting the future needs of the business, identifying the competencies and skills required for key roles, and developing existing employees to take on these roles when the need arises. It is a proactive approach, focusing on the development of a talent pipeline that can step up when an executive or key staff member leaves.

There are several steps to effective succession planning. First, recognize critical roles that are vital to the organization’s operations and performance. These positions often have a high degree of responsibility and require specific skill sets.

Next, identify high-potential employees who demonstrate the aptitude and ambition to rise to these roles. Utilize performance appraisals, leadership assessments, and feedback from supervisors to pinpoint these individuals. Remember, potential does not only refer to performance. It also includes the ability to learn, adapt, and grow, which are crucial in a manufacturing environment.

Once potential successors are identified, invest in their professional growth. Tailored development plans can help them acquire the necessary skills and knowledge. This could involve on-the-job training, mentoring, job rotations, or even further education.

Communication is also a key aspect of succession planning. Be transparent about the process, the identified successors, and their development plans. This can help manage expectations and ensure everyone is on board with the plan.

Periodic review of the succession plan is crucial. As the business changes, so too may the requirements for key roles, and the identified successors. Regular reviews allow for adjustments and ensure the plan remains aligned with the business’s strategic direction.

However, the succession planning process does not end with the appointment of a successor. There should be a structured handover process to facilitate a smooth transition. This includes knowledge transfer, introduction to key stakeholders, and gradual assumption of the role’s responsibilities.

Succession planning is an indispensable strategic process for manufacturing businesses. It fosters a culture of continuous learning and development, ensures leadership continuity, and minimizes disruption during transitions.

By identifying and nurturing potential successors, manufacturing businesses can ensure their long-term sustainability and success. Remember, the future can be unpredictable, but with a robust succession plan, your business can be prepared for whatever comes its way.

RBT CPAs business advisory services professionals are available to assist you with creating, monitoring and updating succession plans. We are also prepared to handle all of your accounting, tax, and audit needs. Interested in learning more? Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

One of the more challenging tax concepts business owners should understand, plan for, and address as part of their overall tax strategy is called nexus.

In simplest terms, nexus defines when you must register to do business and pay sales and use taxes in a particular state (and, in some cases, local jurisdictions). However, there’s nothing simple about it.

In general, if you have a sufficient physical presence in a state – like an office, store, or warehouse – nexus applies. If you have employees working out of another state – even remote workers, agents, or an affiliate – nexus is triggered. And if your business’ economic activity in a state – online or offline – meet certain thresholds, nexus comes into play. These are the easiest triggers to understand – there are others.

What’s more, with the growth of online marketplaces and remote sales, legislation regarding nexus has evolved. As a result, going beyond merely having a physical presence, businesses are required to pay sales and use taxes when they have a significant connection to a state. Each state (and in certain cases, jurisdictions like counties or municipalities) set their own thresholds for triggering “economic nexus.” Thresholds are usually based on revenue, sales volume, and/or number of transactions.

For example, Connecticut adopted its economic nexus threshold in 2018 and updated it in 2019. Today, its threshold is $100,000 in gross sales (including online sales) and 200 or more transactions in the 12 months preceding December 30.

On the other hand, Mississippi adopted its economic nexus threshold in 2023. The threshold is $100,000 in taxable sales within the 12-month period ending on the last day of the most recently completed calendar quarter.

To complicate matters, state thresholds can be adjusted and change. So even if your business didn’t trigger economic nexus a year ago in a certain state that may not be the case today.

The consequences of not complying with nexus requirements can be severe. States can impose penalties, interest, and even civil or criminal charges for non-compliance. Moreover, states can audit businesses and demand payment for uncollected sales tax retroactively for multiple years covered under a statute of limitations. The unexpected financial impact could devastate a business.

To simplify a complex topic, we’ve focused largely on nexus as it relates to sales taxes. However, it’s important to know that when nexus exists it can expand a company’s tax obligations to include state payroll taxes, excise taxes, and franchise taxes (a levy for doing business in a state), as well as additional permit and filing requirements. That’s another discussion for another article.

For now, focus on protecting yourself and your business from the legal and financial ramifications of non-compliance with nexus by consulting with a professional, experienced tax advisor – like the ones you will find at RBT CPAs. Please don’t hesitate to give us a call and learn firsthand why businesses across the Hudson Valley and New York have entrusted us with their accounting, tax, audit, and business advisory needs for over 50 years. RBT and your business can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

The RBT CPAs Advisory Services team receives a lot of inquiries about internal financial controls, especially as a growing number of our manufacturing clients explore and implement Enterprise Resource Planning (ERP) systems. So, we figured we’d do an article on the topic. Take a look as financial controls can help any business – whether it’s adopting an ERP or not – protect its assets, promote transparency, provide data to make business decisions, and instill stakeholder and investor trust.

Starting with the basics…The Sarbanes-Oxley Act (SOX), enacted in 2002, was a regulatory response to major corporate and accounting scandals. SOX Section 404 mandates publicly traded companies in the U.S. establish, document, test, and maintain internal controls and procedures for financial reporting. Among other things, these companies must produce an annual report where management asserts the effectiveness of internal controls.

Private companies looking to go public must be SOX-compliant before an initial public offering. Although not mandatory, many nonprofits voluntarily adopt SOX provisions as best practices. New York State law requires state agencies and public authorities to maintain a system of internal controls to help safeguard public assets and promote accountability in government.

Internal financial controls are processes designed to help prevent fraud, enhance reliability of financial statements, reduce the risk of unexpected financial losses, and ensure compliance with laws and regulations. They include procedures for authorization, record keeping, reconciliations, and auditing. They also contribute to effective management by providing reliable data for decision-making.

Although a business can consider adopting financial controls at any time, they are particularly important as part of ERP implementations. ERP systems eliminate data silos, reducing the risk of errors and fraud while promoting financial integrity and transparency. ERPs enable real-time tracking of financial transactions. So, instead of waiting for end-of-period financial reports, managers can proactively monitor financial processes, promptly detecting and addressing any anomalies. What’s more, by automating routine tasks, ERP systems minimize manual intervention, reducing the risk of errors and freeing up time for more strategic activities. Based on our advisory services teams’ experiences with ERP implementations, the one non-negotiable recommendation we would make is to define internal financial controls as part of the up-front planning process. Trying to develop these controls concurrent with ERP implementation or after the fact can lead to higher implementation costs, longer project timelines, and extended business disruption.

If your business is going to take the time and expense to implement an ERP, defining financial controls upfront is critical to maximizing your return on investment. Even if your business isn’t currently considering an ERP, internal financial controls can provide added protection for your business, while increasing trust among stakeholders, including financial institutions, investors, and lenders.

Interested in learning more? For business advice, accounting, audit, and tax services, RBT CPAs professionals are always available. Give us a call.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Do you feel like you’re losing time trying to track down data and spreadsheets to make important decisions? Are you overwhelmed by the number of programs or systems you have that don’t “talk” to each other?  Have you lost business, profits, or productivity due to data issues? Do compliance and regulatory issues keep you awake at night? Maybe it’s time for you to consider adopting an Enterprise Resource Planning or ERP System.

Who can adopt an ERP?

While a commonly held belief is that ERPs are only for large public companies that’s simply not true. The cloud and technology advancements have made it more affordable and accessible to businesses of all sizes. Today, ERP systems are available for small, medium, and large businesses.

What is it?

ERP stands for Enterprise Resource Planning. It’s a business software solution that can help you manage your data, resources, and operations. Rather than having different systems for distinct functions, an ERP integrates and automates a variety of processes and functions, which can include accounting, customer relationship management, e-commerce, finance, Human Resources, inventory management, manufacturing, marketing, procurement, productivity tracking, sales, supply chain, time systems, scheduling, and more.

An ERP can be modular and scalable, making it easy to add new features and capabilities as your business grows and/or needs change. Some are even customized by industry. While available on-premises (which requires heavy IT infrastructure and staffing investments), the cloud has made it possible to offer ERP capabilities on a subscription basis, prompting businesses big and small to adopt one as part of a larger digital strategy.

When should you consider moving to an ERP?

If you’re losing time, customers, productivity, profits and/or opportunities because of your current systems (or lack thereof)…if you can’t use data to make informed decisions in a timely manner…if you don’t have a big picture view of all aspects of your operation at any given moment…if you’re operating inefficiently…or if your business is having a growth spurt with no end in sight, it may be time to consider adopting an ERP.

Where can it deliver improvements and value?

It can help your business be more competitive by identifying and changing processes to operate more efficiently and effectively; use data to schedule production and projects more effectively; more accurately estimate and track product costs; make better, faster decisions; improve customer service; automate mundane tasks so staff can focus on value-added activities; operate more efficiently and reduce lead times while maximizing production and profitability; and use data for predictive modeling (what would happen if…) and real-time decision-making.

It can also improve your internal controls for accounting and financial reporting and compliance; set the stage for growth, whether that’s with a new business model or a new line of business; and support remote and distributed workers.

It may be considered by lenders, investors, potential business partners or a business sale as governance and business practices come under scrutiny.

Why move to an ERP?

It can offer numerous benefits. An ERP can help you improve data security, reduce operational and administration costs, make data-driven decisions, and serve as a framework that can support future growth. It also requires you to define controls that can help protect your business from fraud and other criminal activities, while boosting regulatory compliance.

How do I get started?

Start by doing some research of your own to learn about ERP systems tailored for manufacturing businesses like yours, what they offer, and pricing (many offer monthly subscription options). You may want to reach out to colleagues in trade associations to learn about their experiences with an ERP. It’s also a good idea to define your budget up front and even conduct a cost-benefit analysis to make sure it’s the right time and move for your business. Plan accordingly – it can take an average of three to nine months to implement a new system, train staff, and monitor outcomes. Finally, don’t underestimate the amount of work involved. An ERP implementation requires dedicated resources and hard work. When done right, the pay off can be quick and bountiful.

You may also consider reaching out to your RBT CPAs contact to learn how we’ve helped other clients choose and implement ERP systems. Also remember, to free you up to focus on projects like ERP implementations, RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Have you been thinking about purchasing new or used equipment to enhance your manufacturing capabilities? How about upgrading technology and software or updating your facility and equipment? With end of year approaching, you have limited time left to consider whether to purchase, lease, or finance certain assets to take advantage of Section 179 tax benefits. It’s also a good time to consider how Section 179 may play into your business and tax strategy for 2024.

Section 179 uses first-year expensing. That means you can deduct the expense for an eligible asset immediately, rather than depreciating it over time. It serves as an incentive for a business owner to invest in the business and enhance its capabilities and services with the purchase and installation of capital equipment.

One big caveat: You must put the asset you purchase into service the year that you plan on taking the deduction. With just weeks left in 2023, it will be important to account for this in your planning.

Most small and mid-sized business owners qualify for Section 179 deductions. Qualifying purchases can include office furniture and equipment; computers and software; certain vehicles (some with annual deduction limits); machines and manufacturing equipment; and other property used for business. Security systems, HVAC systems, roofs, fire protection systems, and other structural improvements to non-residential buildings may also qualify for a Section 179 deduction.

Equipment can be new or used (as long as you weren’t the prior owner). It can be purchased outright, financed, or leased. So, let’s say you want to purchase qualifying equipment for $1 million and you have $250,000 for the down payment and finance the remaining $750,000. As long as the equipment is put into service this year, you can deduct the full $1 million this year.

Through 2026, there’s an added bonus. For expenses not eligible for the Section 179 deduction, there’s a bonus depreciation allowance in year one. For 2023, bonus depreciation is 80% — remember, that’s in addition to regular depreciation. The bonus depreciation decreases for the next three years (60% for 2024, 40% for 2025, 20% for 2026). Starting in 2027, this additional benefit will no longer be available. Because of this phase-out, businesses benefit the most by making capital purchases sooner rather than later.

Section 179 numbers to know for 2023:

• Maximum 179 deduction: $1,160,000
• Phaseout threshold begins at $2,890,000 and ends at $4,050,000. (So, if you buy eligible assets that cost more than $2,890,000, your maximum 179 deduction is reduced dollar for dollar by amounts over $2,890,000. Purchases above $4,050,000 are not eligible for a 179 deduction, but bonus depreciation can still apply.)
• Bonus depreciation: 80%

If you need help determining whether to act quick to take advantage of Section 179 this year or whether to make it part of your tax strategy for 2024, your RBT CPA client manager can help – reach out to him/her today. Please remember RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

In the blink of an eye we’re in the last quarter of 2023. Don’t blink again or you’ll miss the time remaining in the year to make decisions that can impact your tax liability. Instead, take a few minutes to consider deductions and tax credits you may be eligible for. Even better, call your RBT CPAs contact to talk through your options and plans. For now, here are highlights of some opportunities to consider…

Will you be eligible for a Qualified Business Income (QBI) deduction?

Eligible small businesses include includes sole proprietorships, partnership, S corporations, Limited liability companies. For 2023, total taxable income must be under $182,100 for single taxpayers and $364,200 for married taxpayers filing jointly. Businesses with taxable income exceeding those limits may qualify for a partial deduction if taxable income is under $232,100 for single taxpayers and $464,200 for married taxpayers and other tests are met.

For tax years beginning on or before December 31, 2025, the QBI (a.k.a. Section 199A) deduction allows eligible small business owners and self-employed individuals a tax deduction of 20% of their QBI plus 20% of qualified real estate investment trust dividends and qualified publicly traded partnership income. That’s in addition to the standard deduction.

Do you need new equipment?

Internal Revenue Code Section 179 gives you incentive to consider it. If you buy or lease (with qualified financing) appreciable business equipment, you can deduct the full purchase price (or lease amount) from your gross income. Equipment can include office machinery, furniture, vehicles, computers, and more. The item must be new to your business, used for business purposes, and put in service the year that you take the deduction. The most you can deduct under Section 179 for 2023 is $1,160,000. There’s also an 80% first year bonus depreciation for 2023, so you can reduce your tax liability even more.

Have you increased research and development?

You can take a credit to reduce your income tax liability and, under the Inflation Reduction Act, apply up to a $500,000 credit towards payroll taxes for Social Security and FICA. At the same time, it’s important to know that all Section 174 expenses, including R&E for software development, must be amortized over a five-year period (15 years for research conducted outside the U.S.). Before this change, R&E expenses could be immediately deducted from taxable income. So, your tax liability will likely change and may increase significantly.

Have you invested in solar power or energy-saving facility upgrades?

Receive a tax credit for up to $5/square foot for energy efficiency improvements – including but not limited to interior lighting, business envelop, HVAC or hot water systems – that reduce energy and power costs. In addition, if you switch over to low-cost solar power, you may be eligible for a tax credit equal to 30% of the cost of switching.

Should you adopt a new retirement plan?

If eligible, you can claim a tax credit of up to $5,000 for three years for the costs to start, administer, and educate employees about a SEP, Simple IRA, or other qualified plan. What’s more, as noted on the IRS website, “You can claim the credit for each of the first 3 years of the plan and may choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective.”

Deciding whether to take action to reduce tax liabilities and how isn’t simply black and white. It does depend on your short- and long-term business goals, and other variables. That’s why it’s best to speak with your RBT CPAs client manager. He/she can help you understand your options and the implications of any move you make, so you’re in the best position to maximize opportunities that may be available to you in 2023. For more information, give us a call today.

RBT CPAs is proud to say all our work is prepared in the U.S.A. – we never offshore. As a result, you get peace of mind that your operation’s financial and confidential information is handled by full-time, local staff who have met our high standards for quality, ethics, and professionalism.

Within the last few years, registered apprenticeship programs have become a growing part of national, state, and regional workforce planning strategies, making them a strong option for building a talent pipeline with advanced skills to operate new and emerging technologies.

As industries like agriculture, health care, cybersecurity, manufacturing and more evolve thanks to technology, employers are experiencing a skills gap. These industries need employees with higher skillsets, but not necessarily a four-year college degree. Registered apprenticeship programs are helping to fill the gap.

In December of 2022, the Mid-Hudson Regional Economic Development Council’s Workforce Development Strategy identified Advanced Manufacturing as one of three priority sectors for workforce strategies. The report explains, “Advanced Manufacturing differs from traditional manufacturing in that it incorporates innovative technologies, such as computation, sensing, and networking, into the production process. Types of Advanced Manufacturing include additive manufacturing/3D printing, advanced/composite materials, robotics/automation, laser machining/ welding, and certain types of nanotechnology.”

It adds, “Many traditional manufacturers in the Region have also adopted value added manufacturing processes that require similar skill sets and training as those in Advanced Manufacturing.” As a result, there’s a big demand for machinists, welders, electrical and mechanical technicians, and semiconductor technicians, along with computer science skills.

While apprenticeships to develop these skills were once reserved for large employers due to the time, expenses and resources required, registered apprenticeships are now accessible to small and medium manufacturing employers as well, thanks to associations like the Council of Industry (COI) and its Manufacturing Intermediary Apprenticeship Program (MIAP).

COI Vice President of Operations & Workforce Development Johnnieanne Hansen spoke with us about how it works.  “Let’s say you run a small manufacturing business and you have one or two employees who you would like to upskill so they can successfully operate new and emerging technology, now or somewhere down the line. You would give us a call. We evaluate whether an apprenticeship is a good fit for your needs and, if so, we take care of the compliance end of things – helping you identify schools that meet classroom requirements for registered apprenticeships; completing and submitting the necessary paperwork to register with the NYS DOL; onboarding the new apprentice; and then tracking and documenting progress.”

Without the COI’s support, an employer may find it takes six to nine months to meet all the NYS DOL compliance-related responsibilities to build and register an apprentice program. Because the COI is a DOL-approved sponsor for manufacturing related trades, the timeframe to register an apprentice can take less than a week.

Best of all, the COI provides these services to any manufacturer in the Hudson Valley at no cost. While a COI membership does offer numerous advantages and access to additional resources and information about workforce development and funding opportunities, it is not required. Johnnieanne explains, “We want to remove as many barriers as possible to help employers. Their only investment is their time and their commitment to seeing the apprenticeship program through.”

When it comes to paying related schooling costs as part of an apprenticeship program, all SUNY schools in the Hudson Valley offer up to $5,000 in tuition credits. In addition, New York’s Apprenticeship Expansion Grant program provides awards of up to $15,000/apprentice to help cover program costs. (Applications are accepted on an ongoing basis until August 23, 2024.)

There are also tax benefits. Through 2026, apprenticeship program sponsors and participating employers in New York may be eligible for the Empire State Apprenticeship Tax Credit for each apprentice. In general, the tax credit starts at $2,000/year one and increases by $1,000/year until it reaches $6,000/year five. For disadvantaged youth, the credit starts at $5,000/year one and increases to $7,000/year five. If a mentor counsels an apprentice for an entire year, the credit increases by $500.

For more information about an apprenticeship program, refer to the Registered Apprenticeship in New York State booklet or contact the COI. To help you find time to focus on this, please know RBT CPAs is here to support all of your tax, audit, and advisory needs. Give us a call to learn how we can work together to promote your business success.

RBT CPAs is proud to say all our work is prepared in the U.S.A. – we never offshore. As a result, you get peace of mind that your operation’s financial and confidential information is handled by full-time, local staff who have met our high standards for quality, ethics, and professionalism.

Big manufacturers have the money and resources to embrace the many different technologies and capabilities that make up Innovation 4.0, while small and medium businesses may be challenged to simply keep the day-to-day going in an uncertain economic environment, much less take on the task of investing time and resources to build their tech stack. One consideration: it doesn’t have to be an all or nothing proposition.

Technology that makes up Innovation 4.0 (also referred to as Manufacturing 4.0 and smart manufacturing, among other monikers) can help address labor challenges now and in the future. Adopters are finding technologies increase productivity and safety; operate in a more environmentally friendly manner; hasten product development; promote quality; reduce downtime with predictive maintenance; and save time on a variety of other business-related tasks ranging from marketing and invoicing to recruiting and more.

Manufacturing.net reports, “The return on investment of Industry 4.0 can be very high, with a McKinsey report suggesting that the addition of AI and automation technology can lead to 30 to 50 percent reduction in machine downtime; 10 to 30 percent increase in throughput; 15 to 30 percent improvement in productivity, and 85 percent increase in forecasting accuracy…Manufacturing companies that achieve even the lower end of these potential business gains stand to recover their initial expenses very quickly.” (Kumin, Roland. Five Common Myths About Industry 4.0. August 9, 2023. Manufacturing.net.)

Many sources indicate you don’t have to start with a major overhaul that disrupts operations; progress can be made in phases and by doing more with the equipment you already have.

According to Mfgtec.org, “Many of us know that automation is a great way to help increase efficiency in your manufacturing processes. However, not everyone can afford state-of-the-art machinery or robotics. When it comes to inexpensive automation machines, there are several options available that can help streamline manufacturing processes without breaking the bank.” (Timoldi, Daniel. Affordable automation options for manufacturers looking to increase productivity. June 28, 2023. MFGtec.org.)

An article in IndustryWeek.com notes, “The beauty with implementing these technologies is that they build on each other, one investment leading into the next… Manufacturers shouldn’t think twice about simply diving in, researching certain technologies and figuring out how to implement within their companies… A step-by-step approach also allows leadership to gain greater understanding of often complex technologies and systems, snowballing into more successful implementations as time goes on (Karp, Ethan. Digital Transformation on a Small Business Budget: It Can Be Done. February 2, 2023. Industryweek.com.)

The Manufacturing.net article referenced earlier points out, “Modular smart manufacturing platforms are highly flexible and scalable. For example, you can start with a solution to enable predictive maintenance first, before adding another module to automate production orders, then another to capture and analyze quality data, and so on. A good Industry 4.0 platform integrates seamlessly with your existing processes and equipment to automatically capture data, build digital twins, and generate valuable insights. It can also be upgraded as business growth allows.” (Kumin, Roland. Five Common Myths About Industry 4.0. August 9, 2023. Manufacturing.net.)

With so many technology solutions available, it can be challenging to determine where to start or how to proceed; however, there are organizations and resources that can help:

• The Manufacturing & Technology Enterprise Center or MTEC, the official representative of the Manufacturing Extension Partnership (MEP) National Network in New York State/Hudson Valley, provides consulting services to small and midsized manufacturers.
• Empire State Development Division of Science Technology and Innovation (NYSTAR).
• Manufacturing USA Institutes, comprised of public and private institutes with a goal to “secure the future of manufacturing in the US through innovation, collaboration and resources.”
• Association for Advancing Automation (A3), North America’s largest automation trade organization, offers articles, beginner guides, and webinars.

To free you up to focus on your business and technology strategy, RBT CPAs is here to offer you peace of mind that your accounting, audit, tax, and business advisory needs are covered. We’re a leading accounting firm in the Hudson Valley, dedicated to exceptional customer service and upholding the highest levels of integrity. To learn what we can do for you, give us a call.

RBT CPAs is proud to say all of our work is prepared in the U.S.A. – we never offshore. As a result, you get peace of mind that your operation’s financial and confidential information is handled by full-time, local staff who have met our high standards for quality, ethics, and professionalism.

Later this year, new rules are expected to be issued, standardizing what and how large public companies report on ESG (environment, social and governance).

Even if your business is not subject to these rules, it will likely feel the impact, so it’s a good idea to get acquainted with ESG and start preparing (or updating) your own ESG plans now.

As previously reported by RBT CPAs, “This October, the Security and Exchange Commission (SEC) is expected to issue rules to standardize how companies assess, measure, manage and disclose ESG related risks, including emissions resulting from assets not owned or controlled by a reporting organization. So, even if you aren’t subject to SEC rules, someone may be asking for your ESG measures for their own reporting purposes.  

Investors want information about it. Clients are looking for it. Lenders and credit rating agencies may consider it and it’s becoming a growing part of insurance and regulatory conversations. Communities judge by it, as do employees and recruits. It can impact business valuations and capital raising, and increase interest from larger organizations looking to grow through mergers and acquisitions.”

Let’s look at what this means specifically for manufacturers.  A recent Forbes.com article, entitled ESG Principles: Why Manufacturers Must Embrace Sustainability (Henrichsen, Jorge Gonzalez. July 11, 2023), defines ESG for manufacturing this way: “Environmental principles refer to a company’s environmental impact, including its carbon footprint, waste management and energy consumption. Social principles refer to a company’s impact on society, including employee welfare, diversity and inclusion, and community engagement. Governance principles refer to a company’s internal policies and procedures, including transparency, accountability, and risk management.”

It goes onto say, “Pressure continues to mount on manufacturers to meet these sustainability standards, a chorus joined by governments, boards, investors and consumers.”

At the same time, though, one of the biggest motivators for getting on the ESG bandwagon is very simply that it’s good for business. It can help your business operate more efficiently, identifying new ways to get work done and reducing waste. It can help you attract and retain talent – employees feel good about working for a company that genuinely cares about them and the planet. And, it can even help you compete and lead you to new business opportunities, as buyers look to source locally (and reduce fossil fuel use for transportation, for example) and look for businesses that can contribute to their ESG goals (by using more sustainable packaging, as an example).

Another Forbes.com article — Behind All The ESG Virtue Signaling, There’s A Real Opportunity For Manufacturers (Karp, Ethan. March 31, 2023) – discusses three ways small manufacturers can jumpstart their ESG plans:

1. Adopt industry 4.0 technology. “Sensors help factories increase machine efficiency on the production line and reduce fuel consumption. Automation can increase profits and employee safety. If manufacturers look for opportunities to use technology to simultaneously improve the bottom line and advance ESG, it will make significant Industry 4.0 investments even easier to justify.”
2. Innovate using ESG. Numerous start-up manufacturers are building their businesses around an ESG value proposition, both in terms of what they make and how they make it. As a result, they’re working smarter and tapping into the growing percentage of consumers willing to pay a premium for products that reflect ESG values.
3. Focus on your supply chain. From increasing dependability and reducing the risk of ESG violations (i.e., using child labor) to promoting competitiveness and managing operating expenses, reinventing a supply chain to align with ESG values can offer numerous advantages.

We’ll provide more information when the new SEC rules and standards are issued this Fall. In the meantime, if you need time to focus on ESG plans and other work, remember, you can count on RBT CPAs to handle your accounting, tax, audit, and business advisory needs. We believe we succeed when we help our clients succeed. To learn more, give us a call today.

RBT CPAs does not outsource work to any other country. All of our work is prepared in the U.S.A.