If you run an industrial business, you know that production costs constitute the largest portion of your operations’ total expenses.
This has a direct impact on the profitability of your business because the higher the costs, the lower your profit margins will be. In such situations, taking cost efficiency measures can go a long way in optimizing your industrial profit margins. However, this isn’t always easy to do. As you work towards reducing the costs of your production, you need to be careful to ensure that the quality of your products isn’t compromised.
If you’re pursuing cost efficiency with your industrial business, here are some useful tips to help you out:
1. Adopt lean principles in your business
In industrial manufacturing, adopting lean principles involves using less input to achieve more. In any business, any wastage will limit production—whether it’s time, resources, skills, tools, space, or anything else. Whatever form wastage takes, it always has a financial cost attached to it.
Lean manufacturing enables businesses to eliminate wastage while improving production. This means finding ways to give customers everything they want using less finances, time, equipment, human resource, and space. Achieving more with less is the most sustainable way to keep production costs low.
The best way to make your industrial business more cost-efficient is to review the way you source your production inputs. Finding vendors who supply your business with quality resources at a lesser cost will boost your profits significantly.
Besides inputs, you can make your business more cost-efficient by maximizing available space. For instance, you can get used pallet racking to utilize the vertical space in your business premises.
2. Keep your energy costs low
For any industrial business to function, it needs energy. Though energy demands vary based on the level of production of the business, energy bills are among the major costs that industrial companies have to deal with to heat, light, cool, and run equipment in the manufacturing plant. If you don’t pay attention to these costs, they can easily run out of hand and increase your production costs.
Keeping your energy bill low is a great way to achieve cost efficiency in your industrial business. To do this, you’ll need to develop an energy conservation plan and review it regularly to see how it’s working. There are strategies you can integrate into your energy conservation plan to keep your power bills low. These include using LED lights that don’t consume too much energy.
You may also install smart sensors and thermostats to keep tabs on your cooling and heating functions and fix any leaks in the air-conditioning system. Moreover, your business can invest in energy-efficient industrial equipment and strictly schedule operations to ensure that all machines are turned off when they’re not in use.
Alternatively, you can integrate smart technology to schedule equipment start-ups and shut-downs in the production section. Keeping industrial machines turned off during off-production hours can go a long way in keeping energy consumption levels low.
By implementing these recommendations, you’ll be able to cut down energy costs in your industrial business significantly.
3. Adopt good production practices
Successful industrial businesses excel because they’re consistent in giving their customers what they’re looking for, which is quality products.
To maintain this level of production, these businesses adhere to good manufacturing practices. They not only manufacture products using sustainable materials but also position themselves in the marketplace as producers of quality, safe products.
Standardization is key if you want to manufacture quality products. But it comes at a cost. Whether your industrial business operates locally or globally, standardizing the production processes can easily push your manufacturing costs through the roof if you don’t pay attention to them.
The best way to standardize these processes without triggering an increase in production costs is to adopt global standards like the International Standards Organization (ISO) and implement them in your business. Often, these industry standards focus on the manufacturing processes, management systems, and documentation of your operations.
An ISO certification can boost your industrial business by positioning it as one that offers high-quality, eco-friendly, safe, and healthy products. Having the ISO seal will also make your business more trustworthy, which will build loyalty and attract new customers.
Every industrial business needs to keep its production costs low in order to boost profitability. While embracing good manufacturing practices, adopting lean principles, and reducing energy costs, industrial businesses need to do more to achieve cost efficiency. The other steps that industrial businesses can take include servicing their machines regularly, focusing on their return on investment, and paying attention to shipping and logistics costs.