9 Ways to Cut Costs in 2010
Reduce your energy consumption to increase profit
When it comes to cutting costs, there's something to be said for reviewing expenses, letting go of unnecessary staff and limiting discretionary e-xpenditures. Real cost reduction, however, is harder work.
It requires a close look at efficiencies, and a steadfast commitment to make changes or investments that will make the same product or provide the same level of service without sacrificing people or quality. But cutting operating costs is worth the effort when you consider that a savings of $100,000 through cost reductions is the equivalent of $2 million in sales at 5% net profit.
There are many opportunities available for effective cost reduction. A quick review of the items that contribute to the cost of coating includes a lot of costs that are fixed and will not change regardless of whether the system is running efficiently or poorly. The place to look for cost cutting is the variable costs. In most cases this means labor, materials and utilities.
1 Automate Processes
Automation or process changes can generate labor cost savings. Lean manufacturing principles stress removal of non-value-added labor and processes. A process can be analyzed to look for opportunities to improve and eliminate steps that will reduce labor. Common sense can also tell you there's unnecessary labor content in a process.
2 Use Materials Wisely
In many finishing shops, it's hard to impact the cost of materials. Customers specify the coatings to be applied, but finishers may be able to reduce material usage by improving transfer efficiency, reclaiming powder, and assuring they are not applying a coating that is thicker than necessary.
3 Make A Green Checklist
One aspect of your business that's likely ripe for assessment (and can have a huge impact on your bottom line) is your usage of energy and utilities. Coatings systems use electricity to drive motors; natural gas to heat buildings, ovens and washer burners; water in chemical cleaning and pretreatment systems; and compressed air for a variety of tasks. Evaluation of the use of these areas may reveal several major opportunities for cost reduction.