Small Business Cost Control

Posted

The health of any manufacturing operation can be reduced to simple equations of income and revenue streams versus and cost and waste. But within these basic equations lie a range of intersecting factors that complicate the task of balancing income with outgo. If you manage operations for a growing manufacturing firm, keep these factors in mind and consider the following as you search for ways to strengthen your company’s financial outlook.

Overhead

You may be turning off light, heat, and machines when they aren’t in use. But are you monitoring all other methods of controlling overhead expenses? Conduct an audit to determine where all of your energy costs are going, and use the resulting report to find new conservation measures. For example, identify your most inefficient machines and replace them with cost effective alternatives. And pay close attention to site and building usage. Could adding a night shift help you slow overhead waste and fill orders faster? How about sub-leasing your facility during inactive periods of the business cycle?

Materials

At all times, keep one eye on every item that leaves your facility in the form of wasted material. Do you cut pieces from cloth, aluminum, bread dough, clay, or paper, and if so, how do you handle leftover material? Conduct a new audit of waste volume every few years and investigate every potential method of reclamation and reuse. Include stocking methods in your audit to improve product conservation and turnover times. And if you pay an outside contractor to remove toxic, recyclable, or electronic waste products, keep examining these contracts and renew or change them as necessary.

Staffing and Labor

One of the most significant cost cutting areas for most manufacturing firms can be found in labor and staffing policies. Ironically, underpaying employees—especially skilled employees—can be a surprising source of waste in the form of low morale and high turnover. But even among motivated employees who are fairly treated and paid, efficiency improvements are always available in the form of workstation layouts, tool quality, access to training resources, and standardized assessments that optimize strengths and remove weaknesses. Keep promising and ambitious employees on the move, and keep all workers assigned to tasks that make the most of their skill sets.

Keep track of backlogs and bottlenecks on your shop floor, and never assign a task to four people if it can be completed by three. Most important, keep communication channels open with all managers and supervisors. Constant contact will keep small employee issues from becoming big ones.

To keep operations lean and make the most of your talented workforce, reach out to the Little Rock staffing experts at CSS. We can help you staff open positions efficiently and provide your teams with the tools they need to drive your company forward.

Leave a Reply

  • (will not be published)