How can I Reduce the Costs of Production?

Question:  What are some suggestions to reduce the costs of production?


This is the question Operations Management people ask themselves all the time.  Here’s a list of things to do:

  1. Look at the product. How is it engineered? Can it be designed to use less parts? Can it be designed to be assembled faster? Can features be eliminated?
  2. Look at the systems by which the product is assembled. Can they be streamlined? Is there a natural flow, a logical set up and a more efficient process? Are you using a batch method when a process flow would be better?
  3. Look at tools. Do you have the best tools/ machines for the processes? Do you have enough of them? Are they positioned correctly? Are they maintained properly? Are their bottlenecks which cause wasted time and disrupt production?
  4. Look at labor. Can it be mechanized, automated or enhanced? Can the quality of the labor be improved, by additional training, better tools, better conditions?
  5. Look at materials. Can less expensive materials be used? Can better materials, with less defects be used? Can materials be purchased in different sizes to reduce waste?
  6. Look at the shop. Is the environment conductive to efficient production? Is it well lit, temperature and humidity and noise controlled?
  7. Look at quality control. Is it incremental, or do you wait until the product is complete and then find out that there was a defect back at step 2 that needed to be fixed, and now you have extensive rework?
  8. Consider outsourcing part of the product assembly. For example, painting, grinding, polishing, packing may be done cheaper and better by outsourcing.
  9. Look at packaging. Can it be redesigned to be easier, better and less costly?
  10. Look at command and control systems. Do you really know what’s happening in the shop? Do you have internal controls? Do you have relevant metrics? Most manufacturing managers have only “gut feelings” and some really basic information. Monitoring machine usage and downtime, set-up time, inventory transfer time, defect and rework time, process flows and costs of materials, overhead, labor at each stage can provide incredible insight into where the losses, inefficiencies, boondoggles and waste is hiding.

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