Many businesses still rely on the traditional production and manufacturing process. Any company that creates products is involved in this system somehow. Unfortunately, it is one of the most complex, and therefore expensive, parts of running a business. But, it’s very difficult to cut costs here. And much of it takes place through outsourced companies.
Having said that, there are a few ways to shave off costs here and there. Remember, any reduced cost here means you can pass the savings onto your customers. Or, you can pocket that bump in profit margin. Either way, if you lower your manufacturing costs, you instantly improve your bottom line, and save money for your business. So, how exactly do you do that?
Reduce physical labour costs
First of all, you can start to save money on human resources. Most production lines are now fully automated, requiring just a few human workers. The production process has always moved towards robotics and automation, but it’s now more important than ever. We spoke to RGE Group who specialise in injection molding. They told us that their machines need just one person to input the data. From there, the automated process will run by itself, even overnight. It’s often expensive to invest in automated machinery, but it will save you a fortune in the long-run.
Reduce material costs
The other huge cost involved with manufacture is the price of the raw materials. Luckily, there are lots of ways to reduce this necessary cost. First of all, you can look for cheaper alternatives. There are always budget materials on the market, and it could make all the difference. Of course, you need to find a balance between quality and price here. You can also learn to negotiate with suppliers, and get the best possible deal on your materials. Perhaps you could buy your materials in bulk or guarantee the supplier a future contract.
Assess your overheads
Sometimes, the costs mount up in other places. It’s not just the production itself, but everything else around it. The rent costs on the factory or warehouse, for example. Could your business exist in a smaller space? There are also administrative costs, travel, shipping, storage, and supply costs. They often appear small on their own, but as part of a big company structure, they add up to cause a big dent in your finances. Try to shave small amounts off each aspect. Those little savings add up to a lot.
The manufacturing process produces an enormous amount of waste. Whether it’s unused materials or byproducts, it could all be recycled. Look at your production process from every possible angle. Where could you reduce waste and improve efficiency? Sometimes, it’s useful to hire a professional audit team to come in and help you here. They’ll spot the areas that you could tighten up, and save money.
If you’re looking to improve your profits, or give yourself some breathing room, make these crucial changes. Cut your manufacture costs, and pocket the extra!