Top 10 Tips for Mitigating Manufacturing Costs

  • Limit the number of suppliers used and negotiate aggressively with them.
  • Investigate long-term contracts for raw materials and long-term contracts with customers, even at reduced margins.
  • Make all reasonable safety improvements to increase operation time.
  • Empower and motivate employees to make product and process improvements. Encourage employees to innovate, and challenge them positively to increase personal and line productivity.
  • Consider near-sourcing of plants to reduce shipping costs and time and gain more control over manufacturing processes and costs.
  • Talk to customers about what matters most to them about the product. Deliver those and trim costs on other components.
  • Use IT efficiently and streamline business processes whenever possible.
  • Discuss costs and anticipated cost increases with customers. Work together to both increase and decrease prices as commodities fluctuate.
  • Understand the industry and pressures faced by your customers, and whether they have the ability to pass on increased costs to their customers.
  • Reduce overhead costs to offset rising costs in raw materials.

 Source: The East Bay Manufacturing Group Program January 31, 2012