4 Tips to Lower Your Manufacturing Costs
U.S. manufacturing has been making a comeback. In March, Federal Reserve data registered a sixth straight month of expansion in U.S. manufacturing production, with the fastest year-over-year pace since April 2015 and manufacturing capacity utilization also rising to a 16-month high. A gradual fall in the purchasing managers’ index in the following months was reversed by a strong improvement in July, rising to 53.3 from 52 in June. Abundant energy, environmental deregulation, productive workers, reshoring and lower corporate tax rates are helping fuel the recover of the U.S. manufacturing sector.
This trend is good news for manufacturers, but it also means increased competition, making cost-cutting measures to maintain profitability as important as ever. Here are four steps you can take to make your manufacturing efforts more cost-effective.
Adopt Lean Manufacturing Principles
The foundation of a cost-efficient manufacturing model is the principles of lean manufacturing, which revolve around minimizing waste while maintaining productivity. Lean manufacturing, derived from the Toyota Production System, identifies all parts of the manufacturing process that produce value while eliminating factors that contribute to waste.
These waste factors include overproduction of products that can’t be sold immediately for full price; excess inventory storage; unnecessary transportation of goods; wasted motions; idle time of workers and machines; product defects; and unnecessary production steps that don’t add value. Reviewing your production process to eliminate these waste-producing variables will tend to reduce your manufacturing costs.
Use 3-D Printing for Rapid Prototyping and Production
Another way to cut manufacturing costs is by adopting 3-D printing when possible for rapid prototyping and production. Where traditional prototyping uses subtractive process to produce injection molds, wasting material that is cut away, 3-D printing uses an additive process that only uses as much material as is actually needed. Three-dimensional printing also uses a digital blueprint as the basis for a physical prototype, making it easier to correct design flaws.
This streamlining of the prototyping process helps lower associated costs. Three-dimensional injection molding prototyping saves 60 to 75 percent off the cost of traditional injection molding.
It can also have a comparable effect on production costs. To take a dramatic example, start-up Apis Cor has been able to 3-D print a small house for just over $10,000.
Consider Alternative Materials
Another advantage of 3-D printing is that it gives manufacturers more options for selecting alternative materials, which can be another way to cut costs. For instance, a common mistake in product development is to use the most durable or most expensive materials available, even if they are more costly than that required to do the job. A material only has to be durable enough to perform its intended function, and does not necessarily have to be designed to endure conditions outside those parameters. In some cases, a less expensive material can handle the same job without sacrificing quality.
A good example is taken from the aircraft industry, where titanium, steel, and aluminum are all possible materials for plane components. Steel is the strongest of these three materials, while titanium is the most expensive and aluminum is less expensive than titanium, but not as strong as steel. While steel would produce the strongest plane, it would also be heavier, making it less fuel-efficient. Meanwhile, an all-titanium plane would be strong, but also expensive. Consequently, aluminum serves as a cost-efficient material for the bulk of plane frame, wings, sheetings and seats, while titanium is reserved mainly for parts such as the engine where extra durability is needed, and steel is reserved mainly for nuts and bolts.
In a similar fashion, you can often cut costs by considering alternative materials. Your prototyping service or parts supplier may be able to assist you in suggesting materials options that can lower your costs.
Buy in Bulk
Another way to lower you manufacturing costs is to order parts and products in bulk. Ordering in bulk can often literally cut your costs for parts in half. For instance, Lowe’s offers some items in bulk quantity at discounts of anywhere from 5 to 50 percent.
Before making a bulk purchase, it’s recommended to double-check your measurements and to test a product sample to make sure the part you’re ordering fits your requirements. Better suppliers such as o-ring manufacturer Apple Rubber allow clients to request free samples before committing to a large purchase. You should also inquire about minimum quantity requirements, shipping policies, guarantees and similar vital details before making a bulk purchase.