Saving money in any business is about balance. Cut the wrong costs and your end product or service could be compromised, spend too much and you’ll never see a profit.
If you run or manage a manufacturing company here are six tips to help your business save money while maintaining quality.
1. Review your utility bills and other production overheads
It may seem simple, but reviewing how much you pay for utilities is a great place to start. Indirect manufacturing expenses are often thought to be out of your control, but you should keep on top of how much you pay and research whether it’s too much. You can always switch plans and service providers, and may be surprised by how much you save in doing so.
Examples of manufacturing overheads include:
- Your electricity and other expenses required to run your operation.
- Your warehouse rent and insurance.
- Your security system.
- Your gatekeepers and factory supervisors’ salaries.
- Your ongoing regular maintenance costs.
2. Review your suppliers
Building strong, long-lasting relationships with your suppliers is important to the success of your manufacturing company. However, that doesn’t mean you shouldn’t continue to review your options and have transparent conversations with your suppliers costs. You’re well within your rights to negotiate your current rates if you feel you are paying too much for a service, or move to another service provider if you feel this will benefit your businesses long term.
From industrial equipment to chemicals, cleaning solutions to office supplies, there are many areas of ongoing costs that could be reviewed and renegotiated. It may take some time, but in the end these negotiations can greatly improve your returns on investment.
3. Consider each client you currently work with
Are your clients making you money, or are they just wasting your time? Even when the businesses you work with pay on time, the profits you gain may be slim after taking into account the cost of materials and man hours it took to get the job done. If you want to improve on your bottom line, it’s important to work with quality clients that are happy to pay a fair price for your products and services.
4. Invest in quality equipment to save money over time
It may not be a fast solution to cutting costs, but investing in quality equipment can save your manufacturing company a significant amount of money over time. Not only does outdated equipment break down more frequently, incurring ongoing costs of repair, it also prevents you from keeping up with your competitors. To save yourself money on maintenance and allow your business to flourish, it’s important to invest in the latest state-of-the-art machinery within your sector.
5. Work on the reduction of your energy consumption
The costs spent on energy consumption in the manufacturing industry are some of the highest, second only to salary expenses. Money can be saved by updating systems with the latest innovative and energy-efficient solutions. This may require a financial investment to begin with but will also save you more money over time.
6. Minimise downtime and maximise productivity
In the manufacturing industry, time is money. That’s why you should always be on the look out for opportunities to minimise downtime and maximise productivity. Start by looking into ways that you can further automate your systems and processes to save time. Keep on top of potential maintenance work so that emergency repairs don’t lead to extended periods of downtime. Finally, if you are planning on making changes or expanding your business, make sure you plan for possible delays well in advance as this can often lead to extended downtime causing businesses to start haemorrhaging money.
To learn more about how Cotewell can help you to update your manufacturing company’s workspace, get in contact with us today!
Call 1300-590-505 or email email@example.com