Tips to Increase Manufacturing Profitability

Have you noticed that paying more to ship items quickly tends to be a waste of money now that packages are held up by slower shipping times? And the major carriers are no longer offering GSR rebates for late deliveries. When it comes to shipping your goods, it’s often a no-win situation both in satisfying your customers need for fast service and making a profit. That’s why it could be helpful to get an audit of your shipping contract and expenses. Filing for these rebates used to be a great way to save on shipping, even adding up to thousands of dollars for some retailers. But there are still other ways to save that logistics experts can uncover.

Amazon created the free shipping dilemma for every business. How do you compete with Amazon’s low prices and free shipping without offering the same? Companies are forced to integrate the cost of shipping into the cost of their products or absorb them and face lower profits.

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Looking for Places to Save Money?

When you have shipping fees cutting into your profits, you’re left having to find other ways to save money where you can. You’ve got customers with growing demands who will gladly seek out a competitor if you can’t deliver.

At a minimum, you need to work on communication with your customers, firstly to set realistic expectations. If you haven’t already done so, be sure to update your shipping policy so that people are informed ahead of time. If orders are running behind, notify customers and provide the anticipated delivery date. Reply to inquiries promptly. Most customers understand the situation with shipping delays caused by barges stuck at ports so will be willing to wait as long as you are open with them.

But there are other areas of waste you could shore up to help increase profitability. Perhaps you have bottlenecks occurring with faulty equipment or the inconvenient layout of your workstations. Talk to floor managers to see if they have suggestions or complaints you can address. Every fix adds time back on the clock, shortening production time and speeding up delivery to the customer.

How effective are your reporting tools? Do you use an inventory software that provides details about quantities and costs occurring at each workstation? In depth analysis of individual products offers an effective way to uncover waste and allows you to set forth a plan to address that waste to realize greater efficiency and profitability. If you are still operating on different spreadsheets, you probably have varying inventory quantities from one department to another. Even if accurately entered, work in progress tends to add on inventory items and costs not realized in earlier stages of production.

Practicing lean inventory management entails an ongoing effort to reduce waste in all forms – breakage, spoilage, bottlenecks, obsolescence, theft, misplaced items, etc. By starting with the easiest tasks to tackle, you can quickly start making headway in speeding up production and lowering operational costs. The goal is to reach no waste, which is unlikely, but you can make strides to inch closer to that goal with every effort.

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