3 Tips to Lower Your Manufacturing Costs by Deploying Technology

The economy is looking up for manufacturers in 2017. Global manufacturing is on its fastest growth track since February 2014, with the J.P. Morgan Global Manufacturing PMI steady at 52.7, the National Association of Manufacturers reported in its February 2017 update. January saw growth in the manufacturing sectors of 11 of the top 15 markets for U.S.-manufactured goods exports. Technology advances in areas such as 3-D printing, the Internet of Things, big data analytics, and logistics are helping drive the growth of manufacturing. Here’s a closer look at three technology trends your company can use to lower your manufacturing costs and increase your profits.

Use 3-D Printing to Lower Prototyping and Production Costs

3-D printing is literally taking off, as Boeing prepares to launch 3-D printing of satellites. Boeing’s giant satellites normally cost $150 million apiece to produce, but Boeing is hoping to cut costs by taking a cue from companies that are usually 3-D printing to produce smaller satellites more cost-efficiently. Companies such as Airbus and startup firm OneWeb are able to produce small satellites for as little as $500,000 each using 3-D printing methods.

This illustrates the tremendous savings potential 3-D printing represents for manufacturers. A Michigan Technologies study recently test-produced 26 randomly-chosen items to measure the cost of 3-D printing compared to traditional production methods, and the average savings came to 90 percent, rising to as high as 98.65 percent for some items.

Rapid prototyping is one of the initial areas where manufacturers have begun using 3-D printing to cut costs as well as speed up research and development. The high up-front tooling costs of traditional prototyping have often been a barrier for smaller companies. 3-D printing removes this obstacle by slashing prices, while speeding up the prototyping phase from months to just hours. 3-D printing can likewise lower costs for jigs, fixtures, short production runs, and mass customization. Suppliers such as o-ring manufacturer Apple Rubber use 3-D printing to provide companies with custom-made parts for both prototypes and full-scale production.

Optimize Research and Development, Production and Marketing with Big Data

Big data is another technology you can use to lower costs and increase efficiency to boost your profit margin. The use of big data to drive innovation will be one of the major trends in manufacturing this year, forecasts Cerasis. Big data analytics and business intelligence tools can help you spot market trends and make better business decisions based on measurable demand rather than guesswork. This can help you gear your research and development and your marketing toward profitable market niches, saving you money on wasted advertising efforts.

Big data tools are also helping streamline production costs through pairing with factories connected to the Internet of Things. Connected smart factories can provide real-time monitoring of production variables such as product cycle time and equipment uptime, enabling companies to make adjustments to optimize efficiency. For instance, Intel has used smart factories to increase product yields and quality while lowering costs.

Lower Shipping Costs with Smart Logistics

Smart logistics is another tool you can use to boost your profits by lowering shipping costs. Smart logistics harnesses big data analytics and automation to optimize shipping. Companies can match inventory stocking schedules to demand cycles, as well as calculate the most efficient warehouse picking and shipping routes. For instance, by adopting Cisco’s Connected Manufacturing solution to solve a problem with picking inaccuracies that were hurting customer satisfaction, Coca-Cola was able to increase picking accuracy to 99.8 percent and boost worker productivity by 10 percent. UPS has combined smart logistics with 3-D printing to create a nationally-distributed network of 3-D printing production centers, enabling companies to shift production closer to customer locations and thereby cut shipping costs.

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles by others on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com