“As soon as we started using the ProfiTrust platform, not only did our rates decrease dramatically (65% lower!) but we weren’t wasting time chasing the carriers’ mistakes. All we need to do now is wait for our Monday morning report to see how much in refunds ProfiTrust got for us. My only regret is not activating them sooner.” Ben G. – CFO
Effective cost-saving tactics are essential to help your manufacturing business thrive in our increasingly competitive world. As one of the key industries that make up our national economy, the last thing you would want as a manufacturer is to lessen the quantity and the quality of your products as a result of attempting to cut costs. You really want to focus on cutting the right costs, in the right way. With ProfiTrust, profit enhancement has never been easier. Don’t miss out on some major cost drivers. Get ahead of the game and gain a competitive edge with these 10 smart cost-saving ideas that truly work in 2019.
1. Cut Down Your Utility Costs
Decreasing Utility Costs is something that will get you talking about what your utility expenses would be like in a perfect world. When strategically attempting to reduce utility costs, a manufacturer’s most common tactic is to phone a friend. However, the best way to show your operating expenses who’s boss is to introduce them to the people who raised them from the early nineties and earlier. We’re talking to the experts of your decade-old operating expenses showing you what you’ve missed.Are you really paying what you could be paying for your factory’s utility costs? You would be surprised at how much your company can save in oil, electric, gas, and water bills instantly. Let us review your bills and help ensure that you are paying the absolute minimum that your company deserves to be paying. We have access to pricing comps outside of your industry, allowing us to review and negotiate thousands of contracts and invoices annually. This is what permits us to leverage our economies of scale for your company, at no risk to your finances.
2. Go Greener Through Energy Conservation Techniques
“The physical signs and socio-economic impacts of climate change are accelerating as record greenhouse gas concentrations drive global temperatures towards increasingly dangerous levels.”
– WMO Statement on the State of the Global Climate in 2018
With global warming levels reaching a peak, “going green” is a critical and increasingly growing trend in the manufacturing industry especially. A long term sustainable energy plan isn’t just good for the world, it can boost your profitability, grow your companies reputation and help you gain some loyal customers.
Manufacturers will steer away from focusing on energy reduction tactics, in fear that this will add-to instead of cut company costs. This is only true when looking at purchasing costs for energy conservation technology. Have you thought about reducing energy consumption by decreasing the consumption of unneeded gas or electric burners? This is something that can tremendously help to cut company spendings! Try incorporating temperature settings that can help to reduce the money that is unnecessarily spent on energy waste. Energy conservation tactics can help you cut costs instantly.
On top of that, we can help you with profit enhancement by reviewing your bills and ensuring that you are saving in heating, ventilation and air conditioning (HVAC) costs, as well as in oil, electric, gas, and water expenses.
3. Review Company Labor Costs
The salaries that your company pays to factory workers make up a significant portion of your manufacturing expenses. Reducing labor costs is a significant profit enhancement tactic. Some common ways to do this include paying your workers less by hiring unskilled labor at a lower hourly rate, or making your factory workers more efficient in the work that they conduct. Hiring unskilled workers, however, can be tricky and detrimental to your factory’s efficiency. It can also lead to you having to hire more employees, which is counterproductive and time-consuming. Did you ever think of other ways that you can decrease labor costs, without directly influencing your workers’ salaries?
What if you stopped paying more than you should for the health benefits that your company provides its workers with? At ProfiTrust, we have found a much better way for employers to purchase health insurance. We can view data that only the largest companies in the world have access to, to provide our clients with pool pricing. Our clients save an average of 10-15% from their fully funded premium! Start cutting on labor costs instantly, without decreasing a cent of your workers’ salaries. We also provide profit enhancement by helping you save costs in payroll processing. Use our data to your advantage, and we will make sure that you are not paying more than you should for payroll services.
4. Upgrade Your Software
Your logistics department is an essential component that ensures the normal functioning of your business. Looking for ways to enhance your logistics department is a great way to cut costs. Inbound logistics can help to improve resource and scope management and can increase factory throughput, to say the least. Upgrading your software and using cloud technology is one way that you can improve logistics. Manufacturers are increasingly digitizing their companies, as more and more business owners are beginning to recognize the rewarding benefits that cloud systems provide businesses with.
Did you know that the manufacturing industry is amongst the three industries that are experiencing “the greatest pressure from executive management to become 100% cloud-based.” Failure to stay up to date with the latest technology can and will leave your company behind in the competitive world of manufacturing.
If you are thinking about upgrading to cloud technology for your company’s growth, we can help save you money. Trust us to help you with your next Oracle or other ERP license negotiation, by evaluating your maintenance and support costs, Through software audit defense and strategic license planning we take you to the next level and get you the cost savings you’ve always wanted with the ideas of the future.
5. Improve Your Reception
Good reception is another factor that influences your company’s logistics department and helps to ensure smoother operations. This can improve efficiency, decrease downtime, and help in cost savings. Remember, providers design their billing systems to maximize revenues and inefficiencies at your expense. At ProfiTrust, we ensure that this does not happen. We can help to make certain that you have the most efficient plan, without needing to change your service or your vendors.
6. Invest in Equipment
The net profit on high quality, efficient, and sustainable equipment goes way beyond a small Christmas bonus. Waiting for the “right time” results in repair expenses, lost production, and disgruntled workers. Good quality equipment does not only prevents downtime and increase’s efficiency, but it will also have a higher life-span. When you invest in good quality equipment, you are saving your company’s future time and money. What percentage of profit are you losing by using outdated inefficient machinery? How much loss would be incurred by purchasing new machines, if any? If you can’t answer either of these questions, you have to take a step back and think: What am I doing wrong and how can I fix it? If you are thinking about ignoring these questions, ask yourself, is it worth it? Downtime and inefficiency are never really worth it, and the same goes for low-quality equipment with a short life-span. Spend that extra time and money in choosing the right equipment, that will help your company grow, rather than slow it down.
You also want to consider preventative maintenance strategies that will help extend your machinery’s longevity. The last thing you want is to be spending time and money fixing damages that could have been avoided in the first place (this would be especially disheartening in the situation in which you spend a good amount of money on specific equipment). Schedule a certain time each month to check for damages that can be prevented. Being consistent and regular with equipment checkups can serve as a huge plus. Overall, improved quality leads to lower manufacturing costs.
7. Ask Your Employees for Advice
Asking your employees from advice can be extremely valuable. Seeking knowledge from factory staff, who spend all day working alongside your company’s processes and equipment, is a smart way to gain the insight that is necessary to create effective cost-saving tactics that can help your company grow and gain a competitive edge in the manufacturing industry. Hold employee meetings to discuss and ask for ideas that can help to enhance company systems and generate value. Record all proposals in order to come back to it later and in order to pass valuable information down to the future generation of company workers. A great way to encourage incentive is to create a system in which employees are rewarded with interest when their ideas in regards to cost-savings are implemented and put into effect. It is really a win-win situation, both for individual employees and for the company’s overall growth and improvement. Plus, you create loyalty and better company culture when your employees feel heard and valued. The people who are constantly handling and using the company processes will hold precious experience and information that you will not be able to find anywhere else. What better people to seek knowledge from in regards to company growth and enhancement, than from your company’s very own people?
8. Focus on Preventative Maintenance
Preventative maintenance procedures are important for saving your company from future disastrous costs. Developing a company preventative maintenance strategy can help to ensure that factory downtime is avoided and that your company saves money that could be lost in replacing damaged machinery. Prolong the life and quality of your current machinery by making sure that it is cleaned and lubricated when necessary, that filters are replaced, and that spare parts are taken care of.
Taking the time to implement preventative maintenance strategies can really help your company save precious time and money that could be used for company growth elsewhere. Your ultimate goal through such strategies is to avoid company downtime, and as a result, company profit loss. This is definitely something that you do not want to overlook.
9. Recycle by Selling Scraps to Vendors
What do you do with your factory’s excess material? Instead of sending it off to a landfill, sell your factory scraps to vendors who can utilize it. This will promote recycling within your manufacturing business, and will also grant your company some instant profits. You could also make a campaign out of this, to boost your company’s reputation and show that you are supporting and encouraging recycling within the manufacturing industry. Take a moment and list all of the possible discarded material that you could sell instead of sending off to a landfill. This could include metal shavings, different types of electronics, or batteries. A good idea is to accumulate all discarded material so that you could sell it off in larger quantities and make more money the moment you do so. You could even find a professional liquidator that will manage matters for you.
10. Negotiate on Material Costs
A key way to cut down on material costs is by negotiating with sellers. There are two main ways that you can do this. First, you can negotiate with suppliers by buying them in bulk. Sellers will be more likely to provide you with a discount if you choose to buy raw materials in larger quantities. The second way that you can negotiate with sellers is by researching and receiving quotes from other suppliers, that you can use to back up your request. You want to make sure that you conduct the appropriate research because an open-ended request will not really get you anywhere. Entering into a negotiation with a realistic target that is backed up by competitive research is more likely to get you the price that you are looking for.
Use the best quotes to your benefit in order to ask your suppliers for the best discount that they are able to make for your business. Just make sure not to disclose vendor names or contact information. Don’t forget to do this for all of your company’s material costs, including indirect materials. For example, indirect materials could include your company’s cleaning supplies or oil lubricants that are used to lubricate factory machines. Don’t overlook these, as costs that are spent on indirect materials can add up to be quite pricey. Buying indirect materials in bulk as well can help to cut down your manufacturing costs in the long-run.