Part 1
By Ron Ketterling – President

reducing-manufacturing-costsIn Part 2 of our “Effective Ways to Reduce Manufacturing Costs” series, we discussed the importance of product design in relation to lowering manufacturing costs. Since cost cannot be removed after the product is designed, it must be taken into account when designing the product. Product architecture alone can account for 80% of the cost, as well as determine key strategies for the product’s life-cycle. The designers, engineers, manufacturers and purchasers should work together throughout the entire design to figure out the best way to reduce the cost of the product.

Designing products to minimize part cost and material overhead is the first strategy to lowering costs from the beginning of the design process. A huge component to minimizing part costs is buying off-the-shelf parts. Buying off-the-shelf parts can save considerable amounts of design and production time, as well as save on costs and help the company focus on the real mission of designing and building quality products. Suppliers of off-the-shelf parts are more efficient at their specialty, often producing high-quality, reliable and warranty-covered parts that you could not have produced on your own.

Minimizing material overhead costs is also crucial to cutting cost in the design stage. Consider the drivers behind the costs in your material overhead and plan an effective way to reduce or eliminate those drivers. Negotiate with vendors and suppliers to reduce procurement costs and minimize inventory costs wherever you can.

By purchasing off-the-shelf parts and minimizing material overhead costs, companies can work cost savings into the product design itself. This substantial, up-front savings greatly reduces the overall manufacturing cost of the product.

Learn more about reducing costs by downloading our “How to Choose a Manufacturing System” guide. This informative guide will help you identity areas where your system may need fine tuning to help you optimize your cost saving efforts and simplify the production process.