One of the biggest challenges we face in manufacturing is producing quality products at the price with the best margin. But there are things we can all do in the supply chain to ensure that costs remain reasonable while still producing innovative, quality products.
- Avoid offshoring. While it’s true that the first-cost estimates seem low, many manufacturers and converters neglect to factor in quality, time and communication when they hire offshore manufacturers. When working with low-cost offshore manufacturers, there can be a significant difference in quality and your customers may be able to tell the difference. Additionally, due to the time differences as well as cultural differences, you may experience unexpected delays that, as we all know, add cost! Communication is also a primary concern. Failure to accurately communicate a change order or even a deadline can severely impact the cost of a product.
- Select vendor design partners. Some nonwoven manufacturers will partner with you to help you engineer the appropriate design for your product. Contact vendor partners early in product development to ensure that you take advantage of their expertise and experience before your product is very far along in development.
- Reduce overhead costs. Maximize energy efficiency in your manufacturing facility. Additionally, consider implementing build-to-order processes to eliminate inventory costs.
- Examine product lines. Identify any products that are losing money from a total-cost perspective. Take a look at products that are hard to manufacture of those that have a lower profit margin and consider if it makes sense to continue production.
- Get rid of bidding process. Instead of pitting vendors against each other and selecting products based on the low bid, consider establishing trusted vendor partnerships. Work with your supply chain vendors and develop partnerships that make it easier for each of you to do business. And, you’ll have a better idea of the upfront costs of your products based on the history of your partnership and established agreements.
Cutting costs by implementing smart business tactics is helpful to all of us, from manufacturers all the way to the consumer level. Are there ways that your manufacturing business is cutting costs that aren’t listed here?