4 Ways to Cut Manufacturing Costs


Manufacturing revenues are rising, but so are costs, recent data indicates. While U.S. manufacturing revenue is on track to rise 4.6 percent in 2017, according to Institute for Supply Management projections, global manufacturing costs are also rising at their fastest rate in five years, shows IHS Market data. Rising prices in oil and commodities are driving this cost increase, pushing input cost inflation to its highest level since September 2011. In this economic environment, keeping costs down is a priority to remain profitable, especially if you’re a startup with limited capital. Here are four strategies your company can use to cut your manufacturing costs and boost your profit margins.

Rapid Prototyping

For many companies, especially in the startup phase, building a prototype can be an expensive barrier. Making a plastic injection mold can cost $12,000 or more, a cost that multiplies if you need more than one, Rex Plastics estimates.

Fortunately, this cost can be reduced by adopting rapid prototyping, which uses a digital design and 3-D printing to produce prototypes faster at greatly reduced cost. For instance, medical manufacturer Instrumentation Laboratory has been able to cut prototyping costs by 30 percent to as much as 80 percent, saving $600,000 a year and $7.2 million over the product’s 12-year lifespan. If you don’t own your own 3-D printing equipment, you can seek out a rapid prototyping service.

3-D Printing for Production and Shipping

3-D printing can also reduce production and shipping costs. Because 3-D printing produces prototypes faster than traditional methods, engineers gain more time to refine designs, avoiding production delays. Furthermore, with traditional production methods, you may need multiple physical molds for each part of your assembly process, whereas the flexibility of digital design can let you consolidate production steps, thereby cutting costs.

3-D printing can even help cut logistics costs by letting you produce products closer to shipping origin points and their intended destination, lowering shipping costs. UPS now offers 3-D printing services in conjunction with the option of same-day shipping from its primary global distribution center in Louisville, Kentucky.

Material and Supplier Selection

One advantage of 3-D printing is that it gives you greater flexibility in material selection, which can also help lower costs. A number of factors can make materials more expensive than they need to be, explains engineer Michael Pfeifer. For instance, some products are over-designed for more performance and reliability than their use truly requires, and choosing a less durable material can reduce costs without diminishing product function. You may also have several product lines that use similar components made of differing materials, which can enable you to cut costs by using the same material for multiple products. Other ways you can save money on materials include choosing materials optimized for manufacturability rather than just performance or reliability; using a production process that creates more consistent final products out of your selected materials; or reviewing your older designs to see if they include any materials that could be updated with less expensive alternatives.

Choosing the right supplier for your materials can also impact your costs. Investing the time to compare suppliers can pay off in the long run. Ask suppliers for quotes and samples so you can make an informed evaluation. For instance, o-ring manufacturer Apple Rubber offers samples of custom-designed o-rings in over 8,000 sizes using any material.

Scaled Test-marketing and Just-in-time Production

Rolling into full-scale production before your product has been market-tested can be a costly mistake. Testing your product on small focus groups can give you an opportunity to gain valuable feedback. Use customer reactions to improve your product and your sales approach before investing in full-scale production. You may find that customers who use your product are attracted to different benefits or uses than you originally envisioned.

Test-marketing can also help you gauge your sales conversion rate and estimate demand, which can also help you cut costs. With accurate demand projections, you may be able to use just-in-time (JIT) production, where you scale your production levels to actual sales rather than producing an arbitrary number of products, reducing your inventory costs. Use big-data analytics tools to refine your sales projections so you can more accurately estimate demand.


Boris Dzhingarov is a freelance branding & marketing consultant, advising companies and businesses on all aspects of internet marketing, SEO, web design, graphic design, and PPC (pay Per Click). He is the founder of Dzhingarov.com , www.traveltipsor.com , www.blogforweb.com , www.healthannotation.com and www.monetarylibrary.com

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