The industrial revolution started in Europe in the 18 th century, and by the 21 st century, it had been a roller coaster ride for manufacturers. Customer needs, demands, market sentiments, and whatnot have changed drastically. And while coping with the market demands, manufacturing as an industry has evolved through automation, customer experience, efficient inventory, and supply chain systems.
In addition, financial systems came in place to help business owners and managers better control expenditures. Any manufacturing enterprise is a complex unit. It's difficult to make it profitable if it doesn’t work as a single unified unit. In this cutthroat competition manufacturing companies need to have better control over their operations, employee productivity, and costs. Although many other factors affect your business success reducing costs is the crucial one as it is the only medicine that can keep your business strong in a healthy market but also during the market slowdown.
Discover the below techniques to reduce the cost of production:
1. Re-define Manpower Planning: Manpower planning is the essence of any manufacturing process. But even today research says that many manufacturing managers tend to use spreadsheets to keep a log of manpower utilization. It helps you to plan for weeks but if any interruption occurs it affects manpower planning and ultimately throughput. To better manage your manpower, manufacturing managers need a modern ERP which gives you better visibility of your production operations, manpower, insight, trends, and features like predictive analytics which can help you plan. Get real-time data about your manpower utilization, and insights for accurate manpower planning.
2. Assessment Management: We say, “Stich in time, saves nine” and that’s right. Meeting market demands makes it imperative for manufacturing units to run around the clock. Production lines are constantly operating 24/7 throughout the year, but at the end o the day, these are machines and tend to wear and tear and often major machine breakdowns. In case of a major breakdown, it can cost enterprises millions of dollars. So how to avoid this? A modern ERP focus on assessment management which can help you track the maintenance schedule of your big machinery. It can accurately make suggest preventive maintenance schedules to assure the smooth running of your machinery. If you follow the maintenance schedule according to the plan it will defiantly help you to reduce costs and losses that might occur during major breakdowns.
3. Cost of Labour: If you closely look at the components of the unit cost for any product, labor cost is a crucial component. Even though companies automate their production processes still there some human interference is required. So how to reduce the cost of labor if we cannot get rid of the labor? The answer is to maximize productivity, by empowering them with advanced ERP systems to manage their operations effectively. Even management can use an ERP system to reduce the cost of labor by efficiently managing the labor. The rule here is the right people are at the right place and at the right time.
4. Reduce administration costs: Admin activities can be time-consuming and utilize many business resources such as labor and money. Implementing an ERP system can help you to reduce administrative costs. Eradicate redundant information and repetitive tasks. Integrating administration can also reduce human errors and typos, which can be very costly for businesses. Choosing an ERP system gives you a single pane of a glass of view of your business processes.
5. Do not forget material costs: Apart from the labor cost material cost is an important pillar that cannot be ignored while achieving cost reduction. Through an ERP system businesses can manage suppliers efficiently through a systematic grading of suppliers based on product quality, lead time, past performance data, etc. AI and analytical features can help businesses to lay out a robust purchasing strategy to control material costs. SAP ERP is an industry-leading next-generation enterprise software solution designed to help enterprises make decisions faster and reduce costs by up to 30%. This software is also easy to use, which can make your employees more productive and help you become more competitive.
If you are the Production or Manufacturing Manager of a company, think of innovative ways to reduce cost then give it a try to book a free consultation with our industry experts.
Our consultants will sit with you to build a customized strategy to help you reduce production costs. Contact us today for a free consultation. We would love to help you out with any questions or concerns that you may have.
Keyush Consulting Track Record Of 35+ Successful SAP Implementations