3 Sneaky Manufacturing Costs to be Aware Of
"Before anything else, preparation is the key to success." — Alexander Graham Bell
Money is the energy that allows companies to grow from small businesses to large organizations that have influence in their industries. That’s why manufacturers should do everything they can to manage costs effectively.
With a bit of preparation, manufacturers can achieve their production goals and increase their customer base.
Learn more about the three sneaky costs in manufacturing below to prepare for growth.
3 costs in manufacturing
Preparation is key
If you want to grow your company, you need to lay the foundations for success.
Part of that foundation is knowing what you are up against and being prepared to meet challenges as they arise, such as expenses.
For small- to mid-sized manufacturers, this is a necessary skill to have to manage costs during the first stages of growth.
Stay competitive with leaders in your industry by charting these costs ahead of time.
3 costs to be aware of in manufacturing
1. Rent
Rent is a major expense.
Warehouse square footage isn’t cheap; in fact, the average rent paid per square foot in 2019 was $6.36, which for a facility on the small side comes out to over $30,000 per quarter!
That’s a whopping $120,000 a year just to shelter your production process.
With that knowledge, do you really want to waste the precious square footage you have?
Plan out your floorplan to optimize your warehouse space. Of course, you should always maintain OSHA standards by allowing enough room between equipment and walking space.
However, there are other methods to fit more production capacity on your warehouse floor. For example, you can store materials and equipment that aren’t being used elsewhere, such as with NRTC’s Industrial Tool and Fixture Storage solution.
Additionally, consider adding a second level to your warehouse if you have the space. Using access structures such as steel platforms and stairs allow you to optimize the vertical space in your facility, giving you the biggest bang for your rent.
2. Maintenance and repairs
According to a Delaware study, maintenance is the largest controllable expenditure in a manufacturing facility and exceeds the annual net profit in many plants. It’s estimated that maintenance costs are between 15 to 40 percent of total production costs.
On top of that, if you don’t perform maintenance correctly, then repairs (or “reactive maintenance”) are even more expensive. Eventually, equipment that isn’t maintained may need to be replaced entirely, which can sink a company that isn’t expecting that large expense.
Some ways to reduce maintenance (and repair) costs is to simplify procedures, create a maintenance schedule for predictive maintenance, and follow protocols to prevent unnecessary injuries to employees or damage to equipment.
For example, according to the U.S. Department of Energy, predictive maintenance saves up to 40 percent over reactive maintenance, making it the clear choice to save costs on equipment.
3. Downtime
Downtime, especially unplanned downtime, can be a killer.
Why? Because the average cost of a downtime incident is $17,000. Considering how 70% of manufacturers don’t maintain their equipment properly and suffer downtime as a result, that means money is burning when it could be used productively.
Downtime is inefficient: when equipment isn’t working, lead time is increased. That creates angry customers who expected to receive their products on time. The worst-case scenario of downtime is losing customers and ultimately losing revenue.
So, how do you battle unplanned downtime?
As mentioned, maintain your equipment using predictive maintenance for the best results.
Train your employees so they have a keen eye for equipment malfunctions and are better prepared to get your production line back up and running.
Finally, use production data to optimize manufacturing processes for high efficiency.
Choose to be a winner
NRTC Automation encourages manufacturers to be prepared in every area of the production process to see success in their business.
Managing costs through preparation will allow manufacturers to make better use of their warehouse space, actively engage in predictive maintenance, and see a reduction in downtime.
Use the tips listed above to enhance your facility. If you need help knowing where to go next, contact NRTC Automation to get expert advice and guidance to reach the next level.
Stay on track with NRTC Automation
NRTC Automation is dedicated to providing high-value industrial automation and manufacturing equipment solutions to all our customers.
From decommissioning and tear out to industrial robotic training services to custom flexible work cells, NRTC is the key to integrate your workplace. With personalized training and custom-built designs, NRTC Automation is the destination for all your industrial automation and manufacturing equipment services.
Schedule a free consultation by clicking the button below to start exceeding your production goals.