You want to cut costs, right? Of course. If you can cut costs and still do the same job, then as a business, that’s great. The real problem that most manufacturers face when they cut costs is whether or not they are sacrificing quality to do so. When quality goes out the window, then customer satisfaction and product sales can drop. So, what steps can you take to cut costs without sacrificing quality?
Are Your Processes Fully Optimized?
The first step in cutting costs is to check that your processes are optimized as much as they can be. Make sure to look at the entire process, and not just the product-related part. This will help you prepare to cut costs, because you’ll have all the pieces in front of you before you start. Also, always test before you launch the process. An optimization can look good, until you try it out and discover that it messes up something down the line.
While you’re looking at optimization, you might also ask whether a process can be automated or further automated. Automation can be very cost-effective vs. human labor. We’re not advocating that you completely replace human labor with automated labor. However, you should take a look at whether an automation is being used to its best ability, or whether an automation would help a process run more efficiently. Testing out your new automation before putting it into full production will help you make sure the quality of the product remains the same.
Your workforce can also be optimized. Sure, cutting people can cut costs, but it can also damage the overall process and quality of the product. Instead of reducing the number of people, look at reducing overall hours. You can also consider utilizing a work-on-demand schedule as opposed to the usual schedule where everyone is on for a certain amount of time every day. In other words, you have the people there when you need them. This reduces overtime expenses and optimized labor costs.
Energy can be a big cost factor for manufacturers. It’s hard to know where to cut costs in this area, since the energy is needed to produce the product. That’s where conducting an energy audit comes in. If you check all the places where energy is needed in your process, you will likely find at least one place where that energy can be reduced or turned off altogether in favor of moving that part of the process to another time or area.
The next thing to check is your materials. Using a more cost-effective material will reduce your costs. You have to be careful, though. A sub-par material could actually cost you more if it results in the product breaking or causing safety issues. Again, testing is key here to make sure the quality of your product is not affected.
The last thing to check is the cost of storing extra product before it is transported for sale. The cost of storage, any necessary insurance, climate-control needs, and other factors can make the cost of keeping excess inventory far outweigh the return on investment. Manufacturers can benefit from responsive manufacturing operations where customer demand drives the amount of product being produced.