Consider These Cost-Saving Tips

Cutting costs through layoffs or pulling back on new technology can reduce morale and quash innovation, allowing competitors to get ahead.

Looking for cost savings in your operations?

Steve Brand of California Manufacturing Technology Consulting, Torrance, CA (cmtc.com), says there are better ways than cutting personnel or creativity (and possibly sacrificing quality of products or services). He discussed the following 10 alternative strategies (edited here for space) in a Feb. 2019 CMTC-blog post.

Perform a complete assessment.

A thorough and realistic assessment of all manufacturing facilities should be the first step taken when tackling any problem. Cost efficiency, cost reduction, and spend analytics need to be at the top of the list when it comes to supply-chain management (SCM) and procurement. Other areas may also need to be put under a microscope. 

Prioritize ROI (and consider ROX).

Following an assessment, prioritize findings (and be objective). Going several years without a comprehensive audit can result in obsolete processes, procedures, and technologies. Also consider ROX (return on experience). Cutting costs should also benefit end-users and provide them with a better experience. 

Seek improvement from within.

Reach out to employees on the factory floor. They can be a rich source of ideas for improving processes and generating value. Rewarding them for such ideas can fuel their willingness to search for additional ways to improve operations.

Reconsider old ideas.

Original ideas aren’t necessarily bad. Re-evaluating previously proposed cost-saving methods may spur new ideas or cause reconsideration, inspiring their implementation now or in the future.

Follow ISO 9001 standards.

It’s a small price to pay to gain an edge. ISO 9001 outlines the requirements an organization must maintain in its quality system to retain certification. 

Reduce energy consumption (and be greener).

The cost of energy is second only to labor in manufacturing expenses. To reduce energy costs following an assessment, organizations should begin making production decisions based on demand. 

Work smarter through automation.

Automating or consolidating repetitive manual processes can help increase product quality, improve throughput, and potentially cut costs. Even small- and medium-sized operations can find ROI through automation.

Sell scrap to vendors.

Selling scrap to vendors is often overlooked as a way to cash in on metal, batteries, and electronics. Liquidators can also take such items off your hands and manage the sale of the items. These types of recycling help ensure a brighter future for all.

Negotiate with suppliers and freight carriers.

Building long-lasting relationships with suppliers and freight companies is essential, but that doesn’t mean accepting the first price presented. Manufacturers should take advantage of their position and try to renegotiate better rates. Negotiations shouldn’t be viewed as a negative. 

Embrace lean manufacturing.

Lean removes or minimizes non-value work activity and reduces waste throughout an organization, from the manufacturing process, to the front office, to distribution. The focus on “continuous improvement” makes a business and its bottom line better.

Click here to read the full blog post, “10 Effective Cost-Saving Tips for Manufacturers”. EP