Manufacturing can be a profitable industry to be in, but it’s not without its challenges, and that’s especially true in a climate when tariffs, artificial intelligence, and increased competition are all presenting new obstacles on the road towards success.
An effective way for manufacturing companies to enhance their bottom line is to work on reducing costs, and happily, that’s something that is nearly always within reach — and most importantly, without sacrificing quality. In fact, the most effective expense-reducing strategies actively work to improve the quality of output. We’ve put together some of the most effective methods below.
Employee Onboarding and Training
Staff costs can take up a huge chunk of the company’s budget, but managed correctly, it can prove to be an excellent investment. A well-trained, engaged workforce will work much more productively than a transient, disengaged set of employees.
Two areas for manufacturing businesses to focus on include employee onboarding and training. Sound onboarding ensures that the worker is brought up to speed and ready to work well as quickly as possible, while ongoing training ensures that the worker can always draw on best practices for their work. Plus, well-trained, engaged employees are much more likely to stay with the company, ultimately boosting employee retention and minimising the cost of hiring replacement employees.
Use Software
In today’s hyper competitive manufacturing market, it’s not just recommended that manufacturing companies utilise software — it’s essential. There’s a whole range of software that can help with the decision-making processes, drive efficiency, and boost overall product quality, which diminishes the chances of product recalls. For instance, manufacturing ERP software can help with inventory management and provide production schedules based on demand and resource availability, among other tasks, which boosts production output. Customer relationship management software, meanwhile, helps enhance order accuracy and customer service, reducing the risk of returns while also making repeat business more likely.
Negotiate With Suppliers
There’s no way to eliminate supplier-related costs entirely, but how much they cost is within the manufacturing company’s control, to an extent. It all comes down to the power of negotiation, which can provide significant savings compared with simply paying the first price that is mentioned. Some handy strategies for reducing supplier costs include entering into a long-term contract (suppliers are more likely to lower prices if they’re offered long-term business), buying products in bulk (provided you have storage capabilities), or simply asking for better prices/terms from the suppliers with whom you have a strong relationship. Ultimately, it’s better to ask for better prices and be told no rather than not ask at all.
Boost Uptime
If there’s one thing that can eat into a manufacturing company’s profitability, it’s experiencing downtime. It’s not always possible to reduce downtime (for instance, during planned maintenance), but still, it’s best to work on limiting downtime as much as possible. Keeping critical spare parts for your essential machinery can help, as can smoothing out the changeover time so that production keeps on running. Real-time monitoring tools, meanwhile, can help identify any potential issues as early as possible.