There are various ways companies reduce their expenditure when it comes to manufacturing a product. It is a trial and error process that takes a lot of experimentation to get right. However, there are some tried and true methods that people have figured out to have a high degree of success. Here are some of them. If done successfully, reducing costs can ensure the continued existence of your company while simultaneously spurring growth and profitability.

Use standard components

Using custom components, as opposed to standard components, is one of the factors that makes the cost of producing a product rise. Using standard components does not mean that the importance of product quality should be forgotten. What this means is that if less expensive components can be used without sacrificing quality, it would be prudent to use those instead.

Also, the beauty about standard components is that they can be purchased in bulk. Many suppliers offer discounts on bulk orders, which can bring down the cost of production even more. This is one of the biggest advantages of standard components as opposed to ordering from the custom-made components industry.

Increase worker efficiency

Sometimes, when companies need to reduce costs, they either start cutting their staff or reduce the wages of workers. In the end, the job satisfaction of highly-skilled employees is reduced as well, which can cause them to leave. What is worse is that these companies end up keeping or employing workers that are unskilled, rendering their cost reduction efforts irrelevant.

The more effective solution would be to increase worker efficiency through further training so that the average time it takes to produce a single unit is reduced. Another thing would be to let employees in on the cost reduction plan and asking for their input as well. This has the added benefit of making them feel more valued, which can also increase efficiency.

Avoid overproduction

When you overproduce, you need to store the extra units somewhere. This can be costly, especially when they are stored for an extended period of time. You have to factor in the cost of storage, insurance and other additional costs. This is not only a cash-flow stopper, but a working capital reducer as well.

To avoid overproduction and incurring overhead on storage costs, you need to pay attention to the demand and respond accordingly with the right amount of supply. Doing this can also prevent you from under-producing your product and disappointing your consumers. (as you know, disappointed consumers have no problem going to your competitor).

Invest in technology

Technology has come a long way, and through the internet of things (IoT), it has made machinery smart and super-efficient. With IoT constantly providing management with relevant data, they can be in a position to make informed decisions that can increase system and worker efficiency, reduce power consumption and avoid costly downtime. Although the initial cost of technology can be high, the long-term saving benefits are worth the investment.

Having great product ideas is what allows us to create companies and ensure their continued existence. But the most important thing is ensuring manufacturing feasibility so that you have a quality and affordable product for consumers to enjoy. While there are other ways to keep production costs down, the above-mentioned tips should be of great help.

Smart manufacturing

Traditional manufacturing involves a lot of production automation processes. However, these processes are often considered as outcomes of single machinery. Smart manufacturing, on the contrary, addresses the necessity of automation integration. With the fast development of IoTs and wireless connectivity technologies, the concept of smart manufacturing is now taking its steps into reality.

Smart manufacturing often refers to as the core outcome and objective in Industry 4.0 (fourth industrial revolution). It describes a data-driven and technology-based system which is highly connected and integrated, fast responding to changes so that it can meet various conditions in the factory, supply chain and consumer market.

Some key elements that elevates the smart manufacturing are:
✔ Big data and data analytics
✔ Robotics
✔ Industrial Internet of Things (IIoTs)
✔ Artificial intelligence (AI)
✔ Manufacturing toolkits
✔ Wireless connectivity technology

A view of Tesla factory from the parking lot.

Huge potential

Adapting smart manufacturing can be strategically essential, no matter for start-ups or the giants. This is because they are not only deploying one technology, but a broader concept which highlights the integration of several advanced technologies. Ideally, the validation should take business needs, supply chain, and manufacturing process into considerations to generate services and solutions.

Compared to the traditional manufacturing process, it is faster due to its automation with real-time data analysis and condition monitoring, and it can be more efficient. The final goal is to establish a cost-efficient and productive ecosystem.

Smarter product design

These days, companies need to move fast to design new products which meet customers’ and market needs. The smart manufacturing advocates ideas of the smarter and rapid design change process to benefit this goal. First of all, designers should be able to change their designs with agility. They should also be equipped with a proficient level of CAD skills.

Moreover, it is recommended that designers deploy several smart design and manufacturing principles at the initial stage. Next, fast product prototyping with 3D printing technologies is favoured. 3D printing is now tremendously accelerating the design cycle and shorten the time for the following testing procedures.

In the future, the scene in a smart factory can be: designers work together to design products on a collaborative platform, or, even fancier, on a transparent screen with the augmented reality design software. They will print the prototype immediately with the 3D printers, and test with other simulation software.

Deployment of IoT devices

IoT devices have enabled people to connect, transfer, and transform data and information in various areas and in ways that are beyond human imaginations. The evolvement also frees entrepreneurs to improve their manufacturing process, and that is how the IIoTs come from. They especially indicate the IoT devices which will enhance capabilities in the manufacturing industry.

Smart manufacturing best aims at enabling a real-time or near real-time data transmission in its analysis and decision-making process. It comprises process such as condition monitoring, fault checking and manipulation of advanced robotics with automation. These areas need the effort of IIoT devices. It is no doubt that the accomplishment of tasks will largely rely on the performances of these devices. Therefore, companies should properly choose to design or buy these devices for their production lines.

In short, smart manufacturing gives an illustration of how powerful it can be when integration of IIoTs, data, and operational technologies are achieved. Manufacturers who do not adapt these technologies will possibly be left behind in the future.

Jane Lai

By Jane Lai

‍Research writer for DegreeSign, finding and developing informative and helpful guides covering new technologies and future products.