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Cutting overhead costs in manufacturing

As most of you are probably already aware of the costs for your manufacturing are usually called manufacturing costs and they refer to any costs that you incur to make your product, with the exception of amortization and depreciation. But manufacturing costs can include both fixed and variable costs, remember that fixed costs are costs that stay the same no matter how much of the product you make and variable costs are costs that change depending on the amount of product you are manufacturing. And as most of you are probably already aware of if you can lower your manufacturing costs you can increase your profits, which means more money for the company, and this can actually spill down to the employees. But how do you decrease manufacturing costs without harming production, which means lowering overhead costs without cutting back on how much product you are manufacturing. The good news is that there are quite a few ways to decrease your overhead costs in manufacturing without harming your product output.

Here are some ways to decrease your cost of manufacturing.

Tip one:
One thing that you can do to help decrease your overhead costs when it comes to manufacturing is to reduce the amount of products that you have in inventory. The way to do this is to use customized manufacturing or build to order manufacturing. The way this will reduce the overhead costs is you won't have as many products in inventory which will lower your inventory costs. The reason that this will lower your inventory costs is because you will only be making the products as your customers want to purchase them.

Tip two:
Another thing that you can do is to implement some kind of a manufacturing process, such as lean manufacturing or six sigma. These programs are designed to reduce the amount of waste that is created when you are manufacturing your products. What these processes will do is look at you entire manufacturing process, one step at a time and see where you can make any changes or improvements that will increase your productivity. These programs increase your productivity because they get rid of waste and poor quality, which means you are producing more quality products and you are not wasting time or energy on production costs.

Tip three:
Another way that you can decrease your cost of manufacturing is to increase the amount of products that you are manufacturing; basically what you are trying to do is to increase your production. Just because you are increasing your production doesn't mean you are going to always decrease your cost of manufacturing because some companies that increase production don't pay attention to the quality of what they are manufacturing so the increase in production is pointless.

Tip four:
Another thing that you need to look at as a way of decreasing the cost of your manufacturing is the quality of the final product. Many companies lose money on warranty items; this is because of faulty parts or other manufacturing issues. But by checking your quality and ensuring that you are manufacturing the highest quality products you are going to be able to reduce costs overall because not as many items will be returned due to manufacturing issues or because they are damaged.

Tip five:
Another thing that you want to do to help lower your overhead costs in manufacturing is to stay away from outsourcing your manufacturing, especially off shore manufacturing. Many people think that using outsourcing is a great way to lower costs but what they don't realize is that using outsourcing for manufacturing has a variety of hidden overhead costs, which will actually increase your overhead costs rather than lower them.

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