Technology is supposed to make businesses more efficient and productive, but in the end, it helps companies save money. In this article, you will learn about five ways technology can help your factory reduce costs.
Why is Reducing Manufacturing Costs Important?
Reducing manufacturing costs has several positive effects. First and foremost, it allows the companies involved to make more profit. If a company can reduce its cost by even a few percentage points, it will increase profitability. This situation is especially helpful for small-to-medium-sized businesses that have trouble getting noticed because larger players have already claimed market shares.
Second, and perhaps even more importantly, reducing the cost of manufacturing can help a company stay competitive; if someone else is selling a similar product or service at a lower price, you need to reduce your own costs to give customers an incentive to choose you over them. Sometimes this means improving production efficiency, which will make it possible for companies to produce items at a higher rate (thus cutting down on labor costs), while other times, it just means making better use of resources that are already available.
Several techniques can be employed when it comes to cutting the cost of producing goods and services:
- Lean Six Sigma,
- Design for Manufacturability and Assembly (DfMA), and
- Continuous Process Improvement, just to name a few.
Each of these methods has its own set of unique advantages. Still, they all achieve the same purpose: to help reduce costs while encouraging innovation and boosting efficiency throughout the entire process.
Here are 5 tips to reduce your manufacturing costs:
1) Accuracy of Manufacturing Processes
With all the data that a company has on their machines and employee performance in a certain task, they can fine-tune a process to achieve better results in a shorter amount of time. This may result in lower production costs for the company if they can produce more products per work hour than before.
2) Increase Productivity Through Automation
Many tasks such as machine monitoring or inventory management do not need direct human intervention, so it makes sense for companies to automate such processes completely or partially with tools such as bill of materials software. This can reduce the workforce and cut overall costs for a company.
3) Reduce the Risk of Mistakes
As technology evolves, it is becoming more difficult to make a mistake or an error. Since employees have all their work done on a monitor, they cannot turn the computer off by accident, burn a DVD or forget to save their work. Although this sounds like small things (and probably is not worth mentioning), it adds up to thousands of dollars in savings each year for each employee.
4) Improve Customer Satisfaction
Since companies can efficiently provide their services, there is no need for them to hire as many employees as before. They will be able to fulfill orders faster and thus offer better customer service than before, leading to higher sales in the long run.
5) Be Environmentally Friendly
Companies have to be responsible for their negative impact on the environment in our modern world, so they have to find ways to reduce it and thus lower their costs (e.g., using sustainable energy sources). Technology helps them achieve that by supporting “green” manufacturing, considering eco-friendly products, etc.