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Cost -Reduction in Manufacturing
Consider Lean Manufacturing
Use lean manufacturing as a way to keep your material costs down. Lean manufacturing is thought to have originated from the manufacturing techniques of Toyota, the car manufacturer, in the mid-20th century. However, the main idea behind lean manufacturing, which is to reduce waste to an absolute minimum, is as old as manufacturing and the basis of many cost reduction techniques in manufacturing.



According to lean manufacturing principles, seven types of waste should be addressed and corrected, if necessary, for a manufacturing process to be efficient:



Overproduction: Overproduction occurs when you produce a product that cannot be sold or must be sold at a lower price than anticipated, which affects the company’s bottom line.



Inventory: Occurs when more product is produced than the market demands, requiring resources to store it until it is sold. Holding inventory that is slow to sell involves the expenditure of money because storage costs money.



Conveyance: Conveyance itself is not a form of waste. However, incorrect transport can lead to waste. When a part is moved unnecessarily during the manufacturing process, it may be damaged or lead to a delay in the manufacturing process.



Correction: Three types of correction lead to waste. The first occurs when you must correct work that has been completed. The second happens when you repeat a manufacturing process, and the third occurs when you inspect parts to make sure they have been properly manufactured. By perfecting the process itself in the first place, the need for correction is minimized.



Motion: When the workers, processes, and techniques involve unnecessary or awkward motions, the potential for injury increases and the time taken for the processes also increases, which is wasteful.



Processing: When there is no clear picture of the needs of the customer or what the manufacturing process should look like, the whole process becomes wasteful.



Waiting: Whenever there are delays in the process, idle time is incurred both by the workers and your capital, which is a waste all on its own.

Reduce Overhead Costs
Smart Capital Investment

Reduce the Cost of Materials

Materials are another significant part of the production costs involved in manufacturing. When much of your manufacturing expense is due to raw material costs, it makes sense to look for ways to reduce this expense.



For starters, look for ways to buy your raw materials at a lower price. Buy the materials in large amounts to take advantage of discounts on bulk purchases from your suppliers, for example. Negotiate with multiple suppliers and compare them with one another, such as in a procurement process, to ensure you get the most competitive price on your materials.



Use Fewer Materials

Another way to reduce material costs is to use fewer materials in your products. If you can reduce the amount of material going into a unit without significantly impacting the quality of the product, then you reduce your material costs. You can also eliminate or reduce the materials that do not contribute directly to your product, such as packaging and documentation. If a feature isn’t necessary to the ultimate market appeal of your product, then you can do without that feature.