3 Strategies to Cut Manufacturing Costs


No matter how well your products are selling, you can likely still improve your profits by evaluating the amount of money that you are spending on manufacturing. With numerous contributing factors, the manufacturing process can often be adjusted to be more cost-effective. Here are a few strategies to employ to help cut manufacturing costs and improve your bottom line:

Network Strategically

When it comes to getting the best price on your materials, having great relationships with your suppliers and manufacturing partners can be helpful. Even if your relationships don’t secure you a discount, they can offer other benefits, like seasoned advice on material specifications to help cut costs or priority in the production queue.

The key to networking strategically is choosing the right partners to align with. Build strong relationships with the designers, suppliers, manufacturers and anyone else who are essential to your production process. For instance, if your product uses o-rings, as many do, develop a relationship with an o-ring manufacturer like Apple Rubber so you can take advantage of getting speedy quotes and samples to ensure compatibility of the o-ring with your product.

Test Multiple Prototypes Before Beginning Production

One way to save big on large-scale manufacturing is to use multiple prototypes to fully flesh out your product concept before sending it into production. This can help you work out the kinks on the production side so you can maximize the efficiency of the process. Creating prototypes also offers you an opportunity to further refine your idea through market testing to ensure viability among consumers.

For market testing, you could retain the help of an agency that facilitates focus groups and consumer feedback or you could save money by gathering some of your most trusted customers, friends and family to get their opinions. If running your own focus group, you’ll want to be sure to make participation beneficial to product testers, so incentivize it with a discount on their next purchase, complimentary products or pay them for their time.

Depending on the amount of critical feedback you receive, it may be helpful to create an updated prototype and take it through an additional round of product testing. You can continue doing this until the prototype is completely dialed in and you are thoroughly confident in its market viability.

Assess Transportation Costs

Transportation costs for your finished products typically cost around 10 percent of the sales value, and as much as 50 percent of the manufacturing cost, according to logistics company Cerasis. But just because that is the average cost, it doesn’t mean that you can’t get a better deal with a little research and creativity.

Employing the help of a transportation management system can be helpful in driving down costs associated with materials delivery and transportation of finished products. Another strategy to cut transportation costs is to shop around with various logistics and shipping companies to receive an expert consultation about recommended cost-cutting tactics and get quotes for your transportation needs.

If you really like the service from your current shipping provider, you may even be able to use these quotes as leverage to negotiate a lower rate from your current provider. Simply shopping around and checking out a few different shipping and logistics companies can help you secure a better deal on your transportation costs and minimize your overall manufacturing costs.