We often worry about the cost of marketing and publicity, but the reality is that 70% of business expenses go to the labor needed to make a business run.
When was the last time you took a look at your manufacturing costs? Are they starting to cut into your profit?
Fortunately, there are several ways that you can lower your manufacturing costs and boost your profit margins.
Read on for five ways that you can lower manufacturing costs this year.
1. Review Your Product Design
If your products are a few years old at this point, it may be time to review product design. Manufacturing equipment and processes are evolving constantly, and it’s possible that there’s a more efficient way to create your products today. Don’t be afraid to tweak product design if it means producing the same products for less.
2. Review Product Materials
Of course, you want to create products that are durable and high in quality. However, that doesn’t mean that every material needs to be the best available. Going down a single grade in quality can save you massive amounts of money without sacrificing the quality of your overall product.
3. Reduce Manufacturing Waste
Are you manufacturing more than you need? Are you continuing to manufacture products that don’t perform well on the market? Make sure that you’re not creating both financial and material waste by over-producing things you can’t sell.
4. Choose a Quality Manufacturer
One of the biggest sources of waste in manufacturing is poorly manufactured goods. Make sure that you’re working with a manufacturer that isn’t charging you high fees for products that routinely show up broken or incorrectly constructed. In addition, make sure your manufacturer is using precision assembly and not charging you more for the time or resources wasted on outdated manufacturing equipment or techniques.
5. Review Your Warehousing and Shipping Costs
The actual process of manufacturing isn’t the only area where you may be spending more than you need to. Whether you handle warehousing and shipping on your own or contract a third party to take care of this leg of production, take a look at how much you’re spending.
Review and compare rental costs if you’re handling warehousing and shipping on your own. Review and compare your contract if a third party handles your warehousing and shipping. Don’t overlook smaller local contractors in favor of major competitors–smaller contractors may be able to meet your needs more effectively than a huge company like Amazon.
Don’t Neglect Manufacturing Costs
Manufacturing costs can start to spiral out of control if business owners don’t review them frequently. Use these five tips to make sure that you’re not spending more than you need to on manufacturing. Wondering what other directions your industry is going on? If so, you’ve come to the right place. Take a look around at our content and find out more about consulting, management, marketing, and more so that you can make sure that your business is up to par!
