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Six Ways to Reduce Production Costs

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Six Ways to Reduce Production Costs

Posted on Tue, Apr 03, 2012 @ 08:00 AM

Its not uncommon to find everyone from engineers, purchasing agents, to managers and the CEO himself complaining about production costs. Each has their own pet areas to complain about, all of which are valid to some extent or another. However, the cost of most products isnt determined by the vendors, the purchasing department or the manufacturing department; the cost of most products is determined by the engineering department.

What Can I Do?

While there are ways to reduce costs throughout the manufacturing floor, procurement system and support services, the biggest cost reductions can usually be made in the products design. Therefore, reducing production costs should begin at the beginning of the design process, not the end. Creating a cost-effective design, which takes into account the manufacturing process, materials usage and logistics of the manufacturing system is the first step in maintaining reasonable costs.

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Some companies have caught onto this idea, designing their products to reduce material waste and labor costs. Generally speaking, those are companies which produce high volumes of products, such as consumer electronics. Even so, there are a lot of companies, whose engineers still havent gotten on board the cost reduction train. Here are six ways to keep production costs down: 1. Understanding the Manufacturing Process Engineering has so many different disciplines and specialties, that no engineer can know everything. Your basic mechanical design engineer probably isnt going to be an expert on metal parts fabrication, but only on designing the parts and how they go together. Since they dont know the process to fabricate that part, they dont think about how to design it for efficient fabrication. 2. Material Specifications Every company has favorite materials which they use. It might be a particular type of stainless steel which is used for corrosion resistance at a reasonable cost. However, do all the metal parts that company uses need that corrosion resistance? If not, why do they keep specifying that same material? Often, the engineer specified that material because they are used to specifying that material, nothing else. 3. Tolerances The tighter the tolerance on a part, the more care must be taken in its manufacturing. While there are many parts which require tight tolerances, even within those parts, not everything will need that tight a tolerance. Its not uncommon to find parts where parts are specified with a .010 tolerance for any dimension which is annotated to three decimal places (.XXX). The same parts drawing might only require a .030 tolerance for dimensions which are annotated to two decimal places (.XX). Thats fine; but what happens when the draftsman puts a three digit dimension, where that tolerance isnt needed? A 5/8 dimension, annotated as .625 suddenly is understood to need a tight tolerance, even through the part really doesnt need it. 4. Finish Specifications Finishes vary extensively in appearance, durability and cost. While some parts require a fine finish because of appearance, others do to reduce friction or to ensure a seal is made. While a decorative piece may need to be finished well on its entire surface, other parts, where that fine finish is functional, usually only need that fine finish over small sections. Specifying exactly where that finish is needed and allowing a lower grade of finish on other areas of the part can prevent excess labor cost. 5. Ignoring Assembly Time In low to medium volume manufacturing operations, its not uncommon to find everything put together with screws. While screws are great fasteners, they arent necessarily the most effective
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Six Ways to Reduce Production Costs

assembly solution when it comes to time. If you look at the manufacture of high volume products, they use very few screws, with the parts being snapped or glued together. You dont need high volume to be able to design parts that are easy to assemble together. 6. Non-Standardization of Parts Everybody knows about the economy of scale. But that doesnt mean that everyone uses it. When it comes to things like hardware and other off-the-shelf items, they standardize; but not on made-to-order parts. Take something simple, like a bracket. Its not uncommon to find five different brackets in a manufacturing operation, which only differ in the number of holes or the length of the bracket. By modifying the largest bracket, adding holes for all five locations, that one part can take the place of the other four, increasing quantity and reducing line items.

Closing Thoughts
So, how do you put all of this into place? How do you get your design team to come up with designs which can be manufactured at lower prices? There are two basic steps: Have an internal review of all designs by a person or group whose whole purpose is to study and implement cost savings in the design process. Utilize the expertise of the vendors you have partnerships with. Beating on your engineers to make more cost effective designs doesnt work. Most engineers dont think that way. However, there are others who do; people who fall into those two categories, who can consult with your engineers in the design process, helping to reduce production costs. For more on manufacturing, be sure to check out our free company kit.

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