How can I reduce my manufacturing costs?
Tooling and production represents a major investment for most companies, which is why making the right process, design methodology and supplier choices can be absolutely crucial to success. That’s why we’re sharing our five top tips that will ensure your production costs are kept to a minimum.
1. Make sure your products are being made using the most efficient methods
Many products are made using methods that are not suited to their market or, more importantly, their production volumes. One common example is the use of injection moulding for complex, low volume parts, which rarely delivers a return on the high cost of tooling. Processes such as RIM or even vacuum casting are far more suitable.
It also pays to be aware of new developments taking place in the growing Rapid Manufacturing sector, such as the exciting innovations in ‘traditional’ markets like sheet metal. Here, new production tools and software are transforming technical capabilities, costs, lead times and accuracy.
Here at Crucible we make a point of keeping up with all new developments, and would be happy to advise you on the most efficient production methods for your products.
2. Use modular construction methods
If you produce a range of products, consider them as whole and look for ways to share parts and assemblies. A modular approach can save assembly time, reduce inventory costs, enable economies of scale from your suppliers, and minimise repair expenses.
The potential for taking this approach is not always obvious, particularly when products are developed and updated one at a time. However, if you stand back from your product range you may identify opportunities to adopt a modular approach that could deliver some significant savings, and make your product range more coherent.
We would be happy to advise you on this in more detail as part of our free briefing process.
3. Reduce your assembly time
Whether they are made in Shenzhen or Sheffield, the time taken to assemble products always impacts on cost. Some remarkable savings can be made by examining every aspect of how your product is assembled. You should consider how long it takes to put the product in its packaging; whether there are any parts that the customer could assemble; whether a high volume product could be redesigned to be assembled faster; or if there are any parts which play no part in the product’s functionality or the purchaser’s buying decision. If there are, then remove them. You should also consider whether your production tools and jigs are as efficient as they could be.
Finally, and inevitably, you need to consider whether your product would be cheaper if you moved the production location. This is not always as simple as it seems, as the cost of transport is becoming more significant, as is the cost of supervising remote production locations. However, it does remain a very viable option for many. We would be happy to suggest some offshore suppliers who offer low costs and high quality if you are interested.
4. Adjust your production volumes
The number of parts or assemblies that you purchase from your suppliers clearly needs to be matched to your sales, but it’s worth talking to them about the potential cost savings of increasing batch sizes. Some companies have very clear purchase rules which preclude this, but sometimes it is simply the case that “we have always ordered in batches of X”. Increasing order quantities, particularly for small parts that carry little or no storage penalty, can make a dramatic difference to your costs. If your current suppliers can’t or won’t offer you better prices on larger quantities, get some competitive quotations from others, particularly those who have invested in new production equipment and software. The price benefits of working with people that use the latest technology can be significant.
5. Outsource assemblies
Outsourcing can be a complex issue, particularly in specialised industries, but most products have assemblies that could be built by an experienced supplier who can do the job quicker and more efficiently than in-house staff. This is often because they are doing a similar job for a number of customers and have built up expertise (wiring looms, for example). As well as saving time, you can also reduce costs by passing the responsibility of approvals and rejects to the supplier - buying in an assembly that has been fully tested and is ready to attach directly to the product.
An increasing number of primary part suppliers (moulders, sheet metal companies, etc) are offering these types of sub-assembly services as a means of broadening their commercial base. It is often worth talking to them about these services to see if they can offer a better all-round cost than you can achieve in-house, particularly if reject rates are a problem.
The bottom line is keeping your mind open to new methods, suppliers and technologies. As the pace of change continues to accelerate, those who keep up with new tricks will be the ones who grow their profits.