Running any company is a balancing act. You want to be more productive so that you maximize potential profits, but you also want to reduce the running costs of your business as much as possible. This allows you to get even more back from your profits as the money isn’t being eaten up by costs.
This is especially true in the manufacturing industry. The fact is that everything will cost money. You will need to spend money on supplies, on equipment, on utilities, and on employees, not to mention marketing costs and everything else. Being too cheap will mean that your business won’t be as effective, so you need to cut costs in the right areas.
Suppliers and Vendors
The first thing to consider is your supplier. When choosing suppliers, you need to think about three primary considerations. The first is the quality of the product and how appropriate it is for your goals. Not every product needs the best materials that money can buy. But sometimes, cheaping out and getting poor quality materials will make the product worse. Consider what upgrading or downgrading the materials might do to your end product.
Different vendors will provide different types of materials. For example, North Industrial Chemicals primarily deals with chemical products. It might be better to use a few specialized vendors rather than trying to use a generalist that might not have the best materials for your needs.
Second, you need to think about the cost of the supplies. This is a very obvious and important consideration and should be balanced with quality. If you can get a significantly better product for only slightly more cost, it may well be worth it. The cheapest product isn’t always the best option.
Finally, you need to consider how local the vendor is. It doesn’t matter how cheap a product is, if you have to transport it halfway across the world, it becomes a lot more expensive and risky to use. If possible, use local vendors.
Supply Chain Management
On a similar note, your logistics and supply chain can introduce a lot of inefficiencies and added costs to the production process of any product. If there are delays in the supply chain, for example, they can very quickly add up.
The trick is to invest in a good supply chain management system sooner rather than later. You want to be able to predict issues so you aren’t scrambling to deal with them. Use a good logistics partner to help you to manage this side of your business so that you know that things aren’t going to go wrong.
This is one of those investments that works out best when you don’t notice it. If you’re aware of your supply chain, it suggests that there’s something wrong. You want everything to run as smoothly and flexibly as possible.
When it comes to storing your products, have a few spare but try not to have a massive stockpile of materials and products. This will just cost you more in storage and is very inefficient. Focus on flexibility first.
Tools and Equipment
The tools and equipment your company uses will have a direct impact on how productive your manufacturing system is. Unfortunately, tools and equipment are prohibitively expensive at times, so it’s important to balance what your business needs and what would be nice.
Money is time, so any equipment that cuts down on how long something takes is often worth it. But you should calculate how much time you save compared to the money you spend to invest in a new piece of equipment.
One option is to hire equipment on an as-needed basis. If you don’t always need a certain piece of equipment, especially if it’s expensive, it might be better to hire it. This is also more affordable if your company doesn’t have the funds for a large purchase. However, hiring is more expensive over time, so if you use a certain piece of equipment all of the time, consider investing in buying it.
Second hand manufacturing equipment can be a more affordable option if you want to invest in an upgrade. You get the same equipment but it is often considerably cheaper than buying it new. Most reputable dealers only sell working second hand equipment, but it’s still important to bear in mind that it’s been used before so will have some wear and tear on the clock. Make sure you look after your equipment well.
