Manufacturing Overhead: Solutions for Profit Squeeze
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According to a recent survey released by PWC, the majority of industrial manufacturers in the U.S. remain optimistic amidst a world economy that remains weak. Yet, these same manufacturers are also experiencing a tightening on gross margins. This slowed growth is mainly due to three issues that are causing companies to feel the profit squeeze: regulatory pressures, increased energy costs and a lack of demand for certain goods. Procurement managers must constantly perform a juggling act when it comes to finding ways to tackle their current manufacturing overhead while reducing overall manufacturing costs.
Instead of sticking their heads in the sand and trying to wish the problem away, many manufacturers are seeking solutions for how to reduce production cost. During downward swings it is easy to sit back and take a wait and see attitude, however, this type of thinking could actually cost companies money. Slow periods are the perfect time to amp up efforts in learning more about cost control in manufacturing - including what can be done to beef up profits. A renewed focus on this issue is important because a reduction in profitability is seen by many to be a major barrier to continued growth.
Industrial managers who are taking a proactive approach are finding that they are able to easily implement at least one or two factory cost saving ideas into their business. For companies that wish to save time on research and planning, a qualified procurement specialist can do a manufacturing cost estimate and analysis reports. Due to the uncertainty of the global economy, and it’s far reaching effects on U.S. economic viability, each manufacturer must put some thought into discovering which cost reduction strategies in manufacturing is best for their business.
To spur growth during such cautious times, manufacturers are still planning to make investments in product development and technology. These are wise investments that can pay off over the long haul. The flip side of the coin is to find areas where money is being wasted and eliminate those money leaks quickly. Most experienced procurement consultants can provide a business with numerous manufacturing cost savings tips that can contribute to an additional growth in profits. This is a proven strategy that works and doesn’t require increased investment.
