Part 1
By Ron Ketterling – President

effective-ways-to-reduce-manufacturing-costsIn Part 3 of our “Effective Ways to Reduce Manufacturing Costs” series, we discussed how adopting lean manufacturing principles can reduce manufacturing costs by increasing employee productivity, reducing inventories and production time, and cutting errors and scrap by half. We introduced waste elimination in our previous article on Lean Production; however, we would like to go more in depth and discuss how companies can effectively eliminate waste and, ultimately, reduce their manufacturing costs.

Before you even begin to implement lean manufacturing strategies, you must first understand what creates value for a customer. Only a fraction of the total production time and effort actually adds value for the customer. By understanding what the customer wants, companies can identify all the non-value activities (waste) within the organization.

Waste can be defined as any activity that does not add customer-perceived value to the product. Waste can take many forms, such as overproduction, waiting time, excess inventory, over-processing, defective units and transportation. By identifying the forms of waste within the company, businesses can then find ways to eliminate that waste.

Once you have identified the types of waste, you must estimate the size of these wastes. How will eliminating these wastes change the production process? What are the reasons we have been operating with these wastes? By identifying the original problem, you can come up with a solution that will eliminate waste and reduce overall cost.

Learn more about reducing costs through lean production by downloading our article series on Lean Manufacturing Insights. This informative guide will cover the principles of lean production, show you how to eliminate waste and reduce manufacturing costs through lean manufacturing strategies.