Manufacturing is a very different business model than service based industries. There are implicit costs that need to be considered including labor, materials, and overhead. Take some time to evaluate cost management plans to make the most of your budget in the new year.
- Labor. The ways to control labor costs have everything to do with the efficiency and productivity of your work force. Track the output of individuals on your manufacturing floor and pay attention to variables. Understand the skills and abilities of each employee and try to steer them to jobs that take advantage of that within your business. You do not increase productivity by having the wrong people in the wrong roles. Look for the places where production becomes backed up within the process and work out ways to solve those problems.
- Materials. Cost control for materials comes down to making sure you have the best prices, buy in volume, and prevent as many errors as possible. Shop around with various vendors to find out how you can get the best prices for your materials. If you have the space to maintain an inventory of your materials and the capital available, buy them in bulk as much as you can. Reduce waste by minimizing errors in the production line. Understanding how and why mistakes happen will allow you to develop a plan to eliminate that type of error in the future.
- Overhead. The additional costs of running a business can get quickly out of hand. Consider all possible options to optimize the use of your facility. Rather than taking additional days or weeks to fill a large order, consider starting up a second shift to reduce your turnaround time and keep your energy use efficient. Look into the equipment that you use. Could you update and replace it with newer, more efficient machines? The cost may be slightly higher up front but the long term saving will be noticeable.
Are you looking for ways to save money for your business? Temporary employees can help a business meet production in a more efficient way. Call Luttrell Staffing Group Service today to see how we can help you!
