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How to cut manufacturing costs without sacrificing quality

13 July 2021

With recent global events causing massive disruption to electronics manufacturing supply chains and production operations, many companies have found themselves having to make some drastic changes to ensure their survival.

When faced with troubled times, one obvious solution is to look for ways to reduce your costs.

The question though is how to best achieve that goal without compromising the quality or functionality of your product.

In this blog post we explore three key ways to reduce unnecessary costs and boost your overall manufacturing productivity.

Scrutinise your materials

Materials are a hugely significant element of the production process.

You may want to explore the possibilities of sourcing a cheaper supplier for your materials or of negotiating a longer-term contract in order to secure a better price.

Opting to order in larger amounts could also enable you to take advantage of discounts on bulk purchases from your suppliers.

If there is the opportunity to use fewer materials in your products without significantly impacting the quality of your product, then this can also offer a quick win.

It may be worth considering selecting alternative raw materials or components, or even re-envisaging the way in which your product is constructed.  

Finding ways to reduce or eliminate any materials that don’t directly contribute to the product’s operation can also have a significant impact on cost.

Any excess packaging for example will automatically increase the price of shipping - while reliance on paper documentation brings with it the additional consumption of paper, printers, inks, and copying facilities.
Another important factor to consider is your material waste.

The more efficient your production processes are, the less risk there will be of material being binned or written off as scrap.

It is also hugely important to think strategically about your supply chain.

One of the biggest obstacles to efficiency in electronics manufacturing is the increasing prevalence of long lead times on materials and components.

What’s vital is that your suppliers’ goals are completely aligned with your own.

By working closely with your suppliers you can more effectively forecast sales, anticipate those materials that will need to be ordered well in advance and have appropriate substitutions in place in the event that you're faced with unavoidable materials shortages.  

Analyse your operating costs

As obvious as it may seem, one of the simplest ways to reduce expenditure is to build a clear picture of all your operating costs.

This will mean thinking about not just your current outgoings but also analysing how those costs may have changed over time.

Specific areas to focus on will include your administrative expenditure, how you manage your debt, and the sum total of your overheads such as rent, building maintenance, insurance, utilities, office supplies etc.

Another significant area where cost-savings can be made is in analysing your energy consumption.

By carrying out an audit of your operating machinery and workflow you can identify those times where less energy is required.

You can also use the data you obtain to help you cut down on extraneous energy demands, whether that's turning off electrical equipment when not in use or installing automated systems to help you optimise the energy that you do use.

Identify your weak links

Another practical way to hone the cost-effectiveness of your manufacturing process is to look for any inefficiencies or bottlenecks that may be causing your business to underperform.

Are there specific areas of your operation that are slowing you down?

Equipment malfunctions, for example, can add massive pressures to already strained production lines.  

But by thinking proactively, and anticipating potential issues before they occur, you can resolve small problems before they become too big to handle - and dramatically reduce your equipment downtime in the process.

It may be worth investing in automated systems that are designed to measure and analyse quality issues, downtime, and operational performance.

With the help of analytics software, you can pool both real-time and historical data to instantly identify and quantify any issues.

Any commitment to new technologies will of course involve a necessary learning curve but can also save precious time and reap huge rewards in the long term.

In this current environment of component shortages, fluctuating material costs, extended lead-times, and ever-eroding profitability, finding ways to handle disruption,  increase productivity and save money is more crucial than ever.

Ultimately though, an intelligent, value-focused, and multi-disciplined approach to your cost-cutting efforts is what is likely to win you the smart and sustainable savings that you are after.

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