How Small Businesses Can Reduce Manufacturing Overheads

manufacturing industrial park

Whether you run a small metalworking shop or you are a bespoke furniture maker, manufacturing costs are a big overhead. In these tough times, it is vital to reduce manufacturing costs if you want to remain competitive. However, this must not be done at the expense of product quality.

In this article, we will look at some of the best ways to lower your cost of manufacturing.

Reduce the Cost of Materials

The cost of materials may be a significant proportion of your overall manufacturing costs if you use expensive materials like gold. It is important not to switch to an inferior material, as this will compromise the quality of your product, which won’t do your business reputation much good. However, it makes sense to shop around for a new supplier if your existing one is unwilling or unable to offer you any discount on their prices.

For example, if you use hot rolled steel, FastMetals (https://fastmetals.com/pages/hot_roll) has Hot Rolled Mild Steel available to buy at competitive prices and you can use it for a variety of general-purpose applications. Buying materials online is often cheaper, so see if you can make savings in this area.

Improve Efficiency in the Workplace

Look at your manufacturing workflow. Can any of your processes be improved or made more efficient? Examine how long different processes take and see if any steps can be minimized or even eliminated.

Is your manufacturing machinery outdated? Is it worth investing in new, high-tech equipment? You may be able to save money in the long term by investing in more efficient machinery.

Would staff benefit from extra training? Sometimes tasks take longer because employees aren’t aware there are more efficient ways of doing things. Analyze whether you need more staff at certain times; staff shortages could be impacting your productivity and increasing your manufacturing costs in the process because you need to pay overtime to cover shift shortages.

Packing and Shipping

Packing and shipping are other areas where it is easy to waste money. Often, businesses use excessive packaging to protect their items against breakage, but this adds weight and increases the cost of shipping. Try to reduce the amount of packaging you use. Look for lighter, stronger, and ideally recycled packaging materials.

Analyze how much it costs you to ship raw materials and finished goods. Is there a cheaper shipping route you could use? Can you save money by purchasing raw materials from a different seller?

Try and secure better discounts with the transport companies you use. Many transport companies offer better discounts if you commit to a long-term contract or can increase the number of shipments.

Energy-Efficiency

Energy consumption is a factor in the cost of manufacturing, depending on your work processes. Put systems in place that optimize energy consumption, such as light sensors and automated heating and cooling systems. Ensure equipment is switched off when not being used.

Finally, consider switching to a ‘manufacture to order’ business model, so you are not paying to store excess products that might need to be discounted if prices fall.

About Neel Achary 19679 Articles
Neel Achary is the editor of Business News This Week. He has been covering all the business stories, economy, and corporate stories.