5 Common Costs in Manufacturing
Production can be expensive if it isn’t monitored. By paying attention to common manufacturing costs, you can increase your bottom line and grow your company.
In manufacturing, cutting unnecessary costs through lean manufacturing methods is a sure-fire way to grow your company.
There are a few production costs that you should keep an eye on in order to ensure that revenue is growing as much as possible. Check out our list below to find out what you should be looking for.
5 common costs in manufacturing—and cost-saving solutions
1. Labor
A common cost in manufacturing is labor. Human labor consists of wages, taxes, payroll, benefits, and other costs such as occupational injuries. It also includes human mistakes, like defective products and wasted material.
Many workers prefer creative and engaging work over tasks that are monotonous, highly repeatable, and require precision. Implementing automation in these tasks is the simplest way to save on labor costs while decreasing lead time and improving product quality.
For example, in computer electronics manufacturing, human labor costs $24 an hour, whereas robot labor costs $4 an hour. If you want to cut labor costs and provide engaging and meaningful work for your employees, then consider adding industrial robots and equipment to your production line.
NRTC Automation can build a custom robotic work cell specific to your company’s production needs. We use refurbished industrial robots for a cost-effective solution without compromising on quality. Plus, we offer financing and up to 1-year warranty coverage to give you peace of mind with your purchase.
Additionally, we can find qualified manufacturing experts for your company at competitive prices. We will screen applicants to find a professional with experience that meets the need of your job. Visit our Engineering Services page to learn more.
2. Energy
Energy is another common cost that manufacturers must account for during production.
Overhead can be pricy, especially if you aren’t using lean manufacturing practices. Using power factor correction equipment will help keep your energy costs low by managing the amount of energy that is used by your equipment during production.
Other lean manufacturing practices include cutting out unnecessary steps in the production process to reduce lead time and cut energy costs.
3. Quality control
Lacking quality control is a huge cost in manufacturing. When a product is defective, throwing it away can be a nuisance. However, when a defect isn’t caught and the product is sent to customers, the recall can cost millions of dollars.
Taking the time to develop a comprehensive quality control management system will save both face and recall costs. Standardizing this process will also reduce lead time, allowing you to take on more demand.
4. Repairs
Equipment breakdowns can be expensive. Not only do you have to pay for repairs, but unplanned downtime can have a disastrous effect on your bottom line. The average cost of downtime is $5,600 per minute, which can quickly escalate into hundreds of thousands of dollars in lost revenue.
There are several ways you can avoid unplanned downtime.
Have a technician onsite: With an onsite technician, you can handle emergency repairs as they occur to minimize downtime. If you are looking for a technician but can’t find the right person for the job, consider using NRTC Automation’s Engineering Services. We’ll interview and hire professionals with the right experience to get the job done.
Stick to equipment maintenance schedules: One way to avoid repairs is by keeping up with equipment maintenance. For example, industrial robots should be maintained on a regular schedule depending on their working hours and manufacturer. By testing the robot, cleaning out grease, and replacing parts as needed, you can avoid costly repairs or equipment replacements.
Recondition equipment: Another way to avoid having to pay for repairs is by reconditioning your equipment. This will extend the life of your equipment. NRTC Automation offers several levels of reconditioning for industrial robots and equipment.
5. Space
Warehousing space is pricy. In manufacturing, the average rent paid per square foot was $6.36 in 2019. That can add up quickly, especially if you are looking to decommission your current warehouse and expand in the early stages of growth.
Making the most out of your current warehouse space is the best way to save on space. Consider storing unused tools and equipment elsewhere to remove clutter from your warehouse and focus on operations as opposed to storage. If you are looking for a place to keep your equipment, NRTC Automation offers storage solutions for your industrial tools, fixtures, and equipment.
You can also make use of the vertical space in your warehouse. If you have room to fit a second level, consider adding steel platforms and other access structures to create a second floor. This will double your working space in the warehouse and allow you to increase production.
Grow your company by focusing on cost savings
Keep track of costs associated with the list above to prune and adjust your production process for greater cost savings.
Whether you are adding automation to your production line or saving space in the warehouse, NRTC Automation can help. Schedule a free consultation with us to learn more about how we can help you cut your production costs.
PARTNER WITH NRTC AUTOMATION
NRTC Automation is dedicated to providing high-value industrial automation and manufacturing equipment solutions to all its 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.
