On average, manufacturing companies spend at least $30,000 on developing and manufacturing a product, with this figure expected to increase with every change in design specifics. Unfortunately, this could potentially leave companies with low-profit margins, with expenses likely to spiral out of control with every $260,000 lost in every hour of downtime. This begs the question: how can manufacturing companies eliminate such costs and save money?
Examine Product Quality
While quality products are essential for consumer retention, they also allow companies to stand out in their areas of expertise, enabling you to set yourself apart as a trustworthy company. In addition to this, sustaining product quality will allow you to utilize good manufacturing practices, an essential part of manufacturing that helps you to save money in the long run. A few crucial areas to look into for good manufacturing practices are the processes and procedures utilized in your manufacturing.
This could mean switching to various cost-effective processes, such as normalizing if you regularly deal with steel manufacturing. This process involves heating metal to temperatures of up to 1700 degrees Fahrenheit, after which it is cooled to produce a formable product. This increases the ferritic grains in the steel, providing a more durable and consistent product. With numerous companies utilizing such ISO-certified processes, cost savings will often follow suit, significantly cutting production costs.
Keep Your Machinery in Good Shape
If you have broken down equipment, you are likely to need to spend thousands repairing your machinery, with downtime costing you even more. Rather than wait for your equipment to get dilapidated, make it a point to conduct routine maintenance. A few practices to implement are replacing filters, replacing broken and loose parts, and performing regular lubrication to avoid rust. In addition to this, consider utilizing your manufacturer’s maintenance instructions, since each piece of equipment will often require specialized care. A maintenance schedule can also help keep up with this, allowing you to stay on top of each machine’s needs.
Review Labor Costs
Labor will often be a hidden expense for numerous companies, with most struggling to keep up with employee turnover costs. For this, consider hiring a workforce that best lines up with your specific industry needs. Eliminating overtime and over-scheduling by organizing shifts will also help you lower extra costs while helping you achieve improved productivity. In addition to this, outsourcing could also allow you to save money during peak operating times, with training helping you improve skills that reduce errors for maximum productivity.
Minimize Shipping Costs
Shipping costs and poor logistics could cost you resources and time, leading to increased expenses. Eliminating this could be the change that helps your company survive in unprecedented times, with this being evidenced in 2020, as the first half of the year experienced a reduction of trading volume by up to 9.5%. This translated to a reduction in global trade of up to 16% compared to the previous year, with companies experiencing massive losses.
An ideal solution that could help you save production costs during such occurrences involves identifying areas that allow you to reduce your shipping fees. This could mean reducing your outsourcing shipping services, with in-house services providing a cheaper solution. By adopting such an approach, you can customize your shipping with your consumers in mind, whether it is optimizing route plans or delivery schedules. This makes it possible to reduce time wasted on transit, reducing damage to your products.
Another solution would be finding ideal packaging options that help you settle for more efficient and environmentally friendly solutions for shipping. This would allow you to reduce costs spent on expensive packaging, with companies utilizing environmentally friendly packaging often getting incentives for their operations, reducing expenses even further.
Reduce Energy Consumption
Energy is an essential part of any manufacturing company, without which operations would come to a standstill. But even with this, your heating, lighting, and cooling needs can still be achieved by relying on smarter energy savings measures. A few areas to help with this include using smart sensors in your heating and cooling machinery. If you have faulty HVAC systems, now is the time to get them repaired. Additionally, consider utilizing LED lights that rely on low energy consumption.
The above tips will help you employ cost-cutting approaches in your company, helping you increase your returns in the long run. These will be key to helping you stay ahead of your competition while providing quality products for your customers. With this in mind, ensure that your labor, machinery, shipping, and energy needs are your priority.