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. 

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.