Where Do You Cut Costs On The Factory Floor?
It’s natural for any business owner to want to keep things as cost-effective as possible. However, many worry about cutting the costs of their production processes simply because they’re cautious about affecting the quality of their products. However, there are ways to cut those costs without having to make that sacrifice. Here are a few of them.
Take Loss Seriously
Loss happens on every factory floor. You can’t 100% eliminate it, whether it’s due to machine wear and tear, defects in products, or simply lost time due to unplanned downtime. You can, however, use systems like Lean principles to cut down on loss. These principles, when enacted, look at both more effectively maintaining your processes so that they remain reliable, and also reconsidering them, to see if you can’t find any more efficient way to complete workflows on the factory floor. Adopting lean principles isn’t just a one-time change, it’s a commitment that you must continue to make.
Cutting Down On Waste
Aside from the loss of your goods, you should also be concerned about just how much of your materials and defective products end up going to waste, as well. Implementing sustainable practices in a factory business can be an initial investment, but not only does it help the environment, but you can also end up reducing the costs of having to deal with waste by having less of it, as well. Reducing energy consumption by implementing processes as simple as turning off machinery when it’s not in use can result in major savings over time, too.
Rethink Your Supply Chain
If you rely on a supply of raw materials or parts to keep your production working, you want to keep it as reliable as possible and, sometimes, it is worth paying the extra for that reliability. However, for materials that are more common in manufacturing, like M-5 aluminum plate, you should take the time to investigate your options more carefully. For instance, one supplier might be closer and be able to cut the costs of transportation that way, while others may be open to discounts for longer-term contracts.
Manage your inventory more effectively
The cost of holding, storing, and transporting your inventory can be more costly than you think. As such, you should look at means to address, such as changing your warehouse rental space, utilizing inventory management systems to prevent stock loss, and taking the time to forecast how much inventory you need. The last is most important as if you have inventory that you won’t be getting rid of any time soon, not only have you wasted money on something that won’t return on investment any time soon, but there are the space and opportunity costs of the inventory that might otherwise take its space.
More effective management of your production line and of your supply chain are both going to help you build the cost-effective factory needed to keep your costs slim and increase profit margins on every product sold. Use the above examples as a jumping-off point, but you can find plenty of opportunities to further reduce costs on your own, too.