10 Ways To Reduce Manufacturing Costs

When times are hard and profits are slim, many business owners look for ways to reduce manufacturing costs in their facility, without compromising product quality or endangering jobs. Here, we'll take a look at ten of the most effective ways to lower those costs.

1. Audit Your Facility

The first thing to do when you're considering how to reduce your manufacturing costs is to make sure you know exactly what they are. Carry out an audit of all your key operating costs, and track them for a set period. Assess what might be eliminated by limiting administrative costs and managing debt. Look also at how much you're paying for overheads, such as building maintenance, rent, utilities, insurance coverage, office supplies and other incidentals.

2. Reduce The Direct Cost of Materials

You may be able to reduce costs by searching out more competitive suppliers for your materials. If you can't find a cheaper supplier, you might be able to negotiate a longer-term contract to get a lower unit price. Bulk discounts are sometimes offered if your business substantially increases your supplier's annual turnover or revenues, and some suppliers may offer discounts if you pay promptly, or in cash.

3. Evaluate Production Processes

Look at the way your product is made and get rid of any processes that are excessively time-consuming or redundant. You'll need to break down each individual step of the production cycle and track how long each step takes, consulting where necessary with staff who are using specific equipment or performing particular tasks. Keeping all machinery in tip-top condition helps reduce downtime, so you should focus on predictive or pre-emptive maintenance programmes. Routine maintenance can be carried out during slack periods to maximise time efficiency.

4. Restructure Your Product

You might also consider using fewer or cheaper base materials for your product, if you can do this without significantly impacting quality. Streamline your product by doing away with any features that don't contribute directly to its ultimate market appeal.

5. Cut Out Surplus

Subsidiary materials, such as documentation and packaging, may also be reduced. Excess packaging is not only wasteful and often damaging to the environment, but adds to the overall weight of the item, and therefore increases shipping costs. Try and convert your documentation processes to paperless applications, reducing your consumption of printers, inks, and copying facilities, as well as the paper itself.

6. Cut Shipping Costs

Assess how much time and fuel is used bringing in raw materials and delivering finished goods. You may able to adjust delivery routes to optimise travel time or reduce distances, and thus increase the number of daily shipments. If you sub-contract shipping, find a transport company who will also undertake the loading and unloading. See if you can negotiate a long-term contract with a competitively priced firm, preferably a local or non-brand company.

7. Optimise Workforce Efficiency

Start by getting involved with your workforce and motivating them as a team, sharing goals and successes so they feel invested in the business. Employee efficiency can be enhanced by training them in how to work at a faster rate. You can offer incentives to workers who cut the average unit production time. Make sure that workers' particular skills are more closely matched to their assigned tasks. New technology will also assist, but staff must be properly trained in its use.

8. Reduce Energy Consumption

Carry out an audit of your operating machinery and the general workflow, to see if there are times when less energy is required. Cut down wherever possible on unnecessary energy demands, such as air conditioning and any other electrical equipment that can be switched off when not in use. If possible, install an automated control system to optimise energy use.

9. Streamlining

If you produce more than you need, it will cost you to store it – and if the market is saturated, you may have to drop your prices to get rid of it. Beef up your quality control so that there is less spoilage, and less time wasted in redoing poor workmanship. If your facility generates scrap, firstly, see how this might be reduced. If that's not feasible, consider whether it might be recycled or sold on. You can also spring-clean your facility – look at all unused or surplus equipment, from office furniture to obsolete machinery, and see if anything can be resold.

10. Smart Investments

Upgrading tools and machinery can help to reduce manufacturing costs, and will deliver long-term benefits. Careful analysis needs to be carried out on the projected returns on capital purchases, assessing what cost benefits can be achieved before making a large investment. In some cases, it pays to wait, as technology advances at a rate where newer equipment quickly supersedes the old, especially in software.

Cutting costs without cutting corners is a delicate process, but with these ideas on how to reduce manufacturing costs, you should be able to fine-tune your business expenditure.

Are you searching for a freight cost reduction case study to know an efficient way to reduce transportation logistics costs? If freight is a crucial part of your company, your company will continue to face increasing charges throughout the whole of your transport logistics. In addition to the regular fuel and machinery market price rises, suppliers face many budgetary pressures in several directions.

For companies, reducing transportation logistics costs has always been the number one priority. There are several ways to optimize transportation costs, improve the supply chain procedures and save money for businesses.

Strategies for decreasing logistical expenses can range from streamlining inventory levels, revising smarter shipping networks, providing better processes, improving relationships between suppliers and third parties, etc.

A key ingredient in reducing logistics costs is to treat your customer well, listen to them and profit will follow. To help you reach so much more creative ideas, we present this 8 Practical Ways to Reduce Transportation logistics expenses:

1.Get Creative ideas – Don’t Rely On Single Modes

Becoming much more flexible and adaptable in your transport modes can really help to offset losses in ways you may not have taken into account. Freight shipping by sea is usually much cheaper than air. However, the time it would take could eventually cost you sales.

Try to look at transport costs for various modes but don't be too worried about making the switch if necessary. Intermodal transport would be another option available for you that could not have previously considered if you typically rely on single modes.

Rail transportation is considerably cheaper than trucking, but perhaps a unique combination of these two could be the key to staying on time and in a budget. Another way to help with the mode’s flexibility is to reduce your use of more expensive shipping options.

If your buyer only needs part of what you ship as early as possible, you will probably expedite the shipment for a whole load. However, you can bring down the costs by only expediting the freight that has to get there quickly and using cheaper modes for the remaining portion of the shipment.

2. Explore Shipping Consolidation Opportunities

The Less-than-truckload (LTL) shipment is an economical option for smaller weights. And if you can try to consolidate large shipments of different products or shipments for all buyers into one shipment, you would save cash using full load shipping (FTL).

3. Consider warehousing services

If you are shipping a lot of goods from point A to point B, especially over a long distance, you can store products closer to your customers and thus drastically reduce transport costs.

You must first and foremost understand the security considerations. Make sure that the operation of your warehouse is safe - Be securely proactive. Do everything to avoid expensive injuries. Try as much as possible to avoid government fines.

If you have several security problems, the government can close down your operation. Get a safety manager who would be accountable for safety and organize ongoing safety training.

4. Use Automatic container loading system to Reduce Labour Costs

One of the best ways to reducing labour cost, avoid product damages, save costs of production and still be more productive is using our Automatic container loading system.

Analyze the reduction of labor for any warehouse operation. Each project should concentrate on the costs of labour. Labor management software systems are available which can help manage warehouse work.

Creating incentive programs for employees in the warehouse also work best. Try mobility in the warehouse in your four walls. Overhead reduced. And this increases overall individual productivity; less staff and less equipment needed.

5. Use Preventive Maintenance

If you want to cut costs on just about any equipment, preventive maintenance is used to reduce logistics costs - Emergency or breakdown maintenance don’t work. It can be expensive in working hours, customer support, fatal accidents (safety): the container is being unloaded, and the forklift dies.

6. Focus On Logistics Cost Reduction

The simple best logistics cost reduction of supply chain tip is this: work together with suppliers to reduce costs. Sometimes suppliers can cover some direct logistics costs. Try to create a consortium of buyers (a buyer and their suppliers) to purchase the necessary logistics supplies (i.e., Transportation fuel) at a lower cost due to buying in larger quantities.

Start inviting suppliers with a structured agenda at your facility. One topic would be to analyze your goods and present logistics cost reduction ideas. The supplier is perhaps the expert in their field of expertise.

Suppliers can surely help by continuing to work with you in a win-win cost savings programme. Keep a part's function, but drastically reduce component costs, never jeopardize quality.

7. Keep Customers Happy

Keeping logistics support costs incredibly low per order involves customers to be happy (and this Fast-Track customer retention customers). One of the best supply chain cost reduction technique is exceeding customer expectations; companies can keep up and effectively manage the enormous burden of reducing logistics costs.

Because of this high correlation between client satisfaction and overall cost drastic reduction, customer service should also be assessed accordingly for changes in logistics costs.

8. Make Better Uses of Available Storage Space and Increase the Storage Density

Clearly identify and try to eliminate spaces. Always tends to increase the storage density in bins and racks by improving the use of vertical space. Lowers the damage to the shipping containers by eliminating movement during transportation.

Try to make better uses of available storage space to increase the density of storage. Make efforts to encourages organized operations that are linked directly to labor, efficiency, use of assets and accuracy of inventories.