4 Ways Manufacturers Cut Expenses Without Cutting Quality

By  //  March 4, 2021

Is it possible for manufacturers to significantly reduce operating expenses without sacrificing product quality? The operative word in that question is significantly.

Anyone can come up with a dozen easy ways to save a dollar here and there, but cost-cutting that noticeably increases profits is the real goal of smart entrepreneurs, attentive owners, and conscientious fleet managers.

If you manufacture goods for sale, transport them directly to resellers or transport them to storage facilities, chances are you have several opportunities for improvement.

That’s because every company has so many moving parts to its operational puzzle that there are always a few overlooked areas where you can minimize expenses without affecting customer satisfaction, product quality, legal compliance, or long-term financial security.

Here’s a short summary of the four techniques. See which ones especially pertain to what you sell and how your company operates.

Use Just-In-Time Inventory Systems

Pioneered by corporations and government agencies in the 1970s, JIT inventory techniques (JIT stands for just-in-time) began to spread to the West by the early 1980s and have become popular with companies that need to keep storage costs to a bare minimum.

The idea behind JIT is keeping a close eye on logistics so that you never have to store for-sale goods. The items you send to customers arrive at the precise moment they’re needed for assembly, packaging, or shipment. That’s the ideal, but in practice JIT allows for some inventory storage but a minimal amount.

Not every company can use JIT but an experienced CPA can tell you if the technique can save your organization money based on greatly reduced fees for storage, security, and verification of inventoried goods.

Focus on Efficient, Safe Fleet Management

There’s a major misconception about safety being a component of expenses. It’s not, primarily because in any manufacturing entity, enhanced safety means fewer accidents, injuries, legal exposure, and employee downtime.

When it comes to vehicle fleets, real-time incident detection, for example, along with in-cab coaching and AI dash cams, are three highly effective ways to lower costs. How? All three work in tandem to protect drivers, reduce the number of accidents, enhance drivers’ skills, and create a more streamlined delivery process. You can check prices online for any of those items and learn more about what they can do for your fleet.

Redesign Packaging

Redesigning your product packaging is not about aesthetics alone. It’s mostly about doing a review of the materials you’re using in packages. A packaging professional can review your retail or wholesale offerings and give actionable advice about how to switch to materials like paper, plastic, wood, and others that come with lower costs for many categories of products.

Downsize Rented Office Space

It might have taken a global pandemic to teach entrepreneurs that they didn’t need all that office space, but the lesson was a good one. There are a few ways to reduce your rent bills and utility expenses along with them. First, encourage workers who can telecommute from home.

Then consolidate your current space and redesign it. If you have two or three shifts, use shared desks. The often-mocked cubicle is actually a highly efficient way to get the most out of a given amount of square footage of office space.