Challenging economic times mean businesses are applying every possible strategy to remain afloat. Companies are pushing their production capacity to its maximum limits to increase sales and lower production costs. However, reducing costs should not sacrifice product quality. This is the conundrum that many manufacturers are facing as the economy starts recovering.

While increasing production volumes lowers product costs, it should be among an arsenal of tactics companies use to keep their pricing relevant and within market standards. Here are some valuable ideas:

Process analysis

There is no point in upping production to lower product costs when processes are inefficient and ineffective. This causes monetary and productivity wastage that could impact product costs. Using Six Sigma certification from 6Sigma, managers can start analyzing their production procedures looking for inefficiencies that require immediate intervention to improve production output.

Process streamlining will allow for increased output using fewer inputs. The result is increased production with decreased processing costs. Companies can make more products without requiring additional machine-hours, labor, or raw materials when every process operates as it should.

This will already facilitate a lowering of costs. Should the business choose to ramp up production using efficient operations, they can generate more sales while further lowering costs.

Human resources considerations

Labor costs eat into a company’s budget and can hamper enhanced production processes. Part of a business procedure analysis should feature an in-depth investigation into how human resources are deployed. Many employees cost the company a lot of money and do not produce the required results. They offer the company little value, acting as a drain on financial resources.

Improving human resources contributions might require streamlining the workforce, eliminating certain jobs, and offering training and development to employees to perform more productively. These cost savings alone can reduce production costs, increase productivity, and thereby lower product costs.

Space considerations

Many companies operate in spaces that are too big as their operations are not set up using principles of ergonomics. When renting a building and paying by the square foot, companies could be wasting thousands of dollars per annum.

Restructuring manufacturing processes by streamlining the production line can save time and space. Operating space savings could affect rental prices, reducing this expense, providing an opportunity to reduce production costs. The time savings allow for more production within the same hours, consuming similar amounts of energy, and utilizing identical labor input.

Automation

Many automation processes require significant expenditure but pay for themselves many times over in the long run. Companies that automate can improve their production numbers, passing the lowered costs to their consumers. Many employees view automation as a threat to their jobs, which might be the case in some circumstances.

Automation stabilizes production processes, allowing companies to increase their output and decrease operating costs. Machines are more reliable than humans and are unlikely to disrupt production like employees who call in sick, go on vacation, strike, and require additional investment, including health insurance.

Materials and suppliers

Many manufacturers buy raw materials from suppliers they have been dealing with for years without considering that other organizations might deliver better prices and services. Companies must leverage their suppliers to ensure that they get the best possible deal, including competitive pricing and discounts for settling accounts early. A continuous review of supplier relationships ensures that manufacturers keep costs down.

It might be time to consider substituting cheaper materials into the manufacturing process, provided they do not compromise product quality. Technology has enabled the development of new materials that cost less and work better. Being flexible and willing to consider changing options keeps production prices down and improves outputs.