It’s true that ERP software requires a major investment, but there’s also an even bigger cost in not making the investment. While some manufacturers choose to stick to the tried and true methods of the past, others seek technology solutions. Manufacturers cannot afford to put off an ERP implementation while their competition invests in ERP and starts reaping the many benefits we’ll touch on below.
If the supplier of components is not willing to consider price reductions and can't offer less expensive alternatives, a company can explore sourcing from different suppliers. It can send the component requirements to various possible suppliers and select those that offer the best value in terms of meeting the specifications and low pricing. Sourcing from two or three suppliers keeps prices low due to competition.
An effective strategy for reducing production costs is to redesign the product. Companies have to identify the key characteristics of the product that are responsible for its success in the marketplace. Other features may be costly but add little value for customers. Companies can change the design of the product to reduce costs by eliminating unimportant features while retaining the characteristics that customers value
A company evaluating its production costs may find that employees are not working efficiently or lack the awareness of costs that would allow them to help with reductions. Training employees to understand how the production cycle works and their role in cost reduction makes them part of the solution. When a company trains its employees to be aware of how to reduce costs and informs them of progress, production workers become partners in cost reduction.
Technology allows cost reduction in two ways. It allows automation of certain production processes, resulting in greater consistency and reduced costs, and companies can use it to analyze their production work flow. Many companies already use a high degree of automation but have considerable scope for work flow optimization. Rising Wings offers a Production Management Software in Surat, India that analyzes the production processes and identifies waiting times and their causes. It shows where material and components are not available when needed and allows companies to streamline production, increasing efficiency and reducing costs.