We live in a world where manufacturing has moved to Asia.Price is what it's all about.Hence the page title - 'low cost manufacture'.You simply can't compete on labour cost - so you find means of removing the labour, or have the labour intensive part made overseas.If you can extract the labour - as in the video on the right then the rules are different.Beware of the middlemen doing this for you.The amazing thing is that there are so many people, and I use the average company director as an example, who seem to live in some sort of dream world that you would have a hope of competing with Asia. Normally I challenge them to count the products around them that are made in other than Asia. The TV set, the air conditioner, the computer, the printer, the video player, the BBQ, it goes on and on.
We can help you in all the above areas and more.We have a summary list document here
I used to have this funny idea that the 'best' product around would win !Reality taught me that this is a load of nonsense ! It just doesn't work that way mate !The best product is sitting in someone's drawer somewhere. The fifth best has the marketplace ! Why ? Well because it's available at a realist price, is properly packaged, promoted and effectively distributed.If you want to have your own personal delusion - fine ! If it is a 'hobby' for you to keep you off the streets - OK - BUT - if you actually want to make a commercial success of your product then you need to re-evaluate.We outsource products/packaging/printing to Asia in a substantial way ... detailshere
Optimising the product for the process is one of the secrets of product development. You do not impose your design on the process, but make the most2 of it by being prepared to change and compromise where required.
You get the best cost outcome by working through the product processing with the plant people. The aim should be to sort out the processing issues that effect the product price. This includes things like reject (off spec.) production, careful selection of the right raw materials. Elimination of labour intensive operations for low cost manufacture is essential.To-and-fro between the Product design and its Processing and still try to maintain the product feature benefits. Smarter design, less waste, working to make the most of the processing equipment, will give you lower costs, and better plant utilisation.Too often the Designer imposes upon the Process people, rather than work with them.
Should special equipment need to be designed to achieve the right outcome then we can do this. However wherever possible I always advise people to look for off-the-shelf solutions if possible. It is better to subcontract out product manufacture wherever possible, provided you can find competitive contractors that can produce at consistent quality.Example - when G.R.P.Technology was first started many years back this was a plant design to use water jet cutting, which was very new then. This allowed cutting of product automatically to size continuously without dust and material wastage.
A small section of plant we designed in the past
In the Western world labour costs ! - you do not want to double handle anything. There are a lot of tricks, procedures and equipment to avoid costs associated with handling raw materials and product.
Plant & Storage Layout Factory layout of existing plant in a format that ALL players can easily understand ! Location of people, and optimum equipment layout on floor plan to suit is an essential starting point for low cost manufacture.Improvements to Plant and Storage Layout Rearrangement of the system to achieve minimum handling of Raw Materials and finished goods. It will reduce operating costs. Optimum storage arrangement considering storage height as well as floor space is a valuable exercise. Consideration of ease of identification of components as they pass into the factory, through each section, and out of the warehouse to effectively track inventory with minimum effort.
We live in the age of process control - get on with it ! There are limitless options for automation - your Activity Based Costing system is the guide to what you spend - it will weigh the saving options.I have experience with computer controlled plants, and have gone further down the route to link into the information system, so production data is even available to the sales rep. in the field.This can result in efficiency increase, control of quality (and reduction of waste) with less labour and data for your management control system.Computer Controlled Process'sThe secret here is to use systems that allow data to flow in and out of the plant in a standard form which is compatible with other software, so that you can link up your inventory, scheduling, costing & company reporting.
Optimum use of LabourLook carefully at where the people are located in relation to the equipment layout and material flow. Redesign layout to 'bring the process to the people'. What equipment (standard or purpose built) can be employed to remove labour intensive functions. Use Activity Based Costing to allow 'what-if' decision making.What parts of your process could be more effectively outsourced ? See Outsourcing Presentation here
Process cost reduction is one of my favorite subjects. Surprisingly one that few companies take seriously (apart from using the buzzwords). There are usually always options for those prepared to think outside-of-the-square.Activity Based Costing (see Costing) is the key tool to use for this function.
Forecasting Demand So many companies (small & large) have poor forecasting ability, which is inexcusable considering how many simple forecasting packages are available. Forecasting allows you to look at how to make the most of you processing assets and minimise inventory. For those with seasonal sales this becomes absolutely crucial for low cost manufacture.
Capacity Planning A reasonably accurate forecast is the basis for this. The use of Activity Based Costing will allow you to put a value on spare capacity and prompt some insightful marketing decisions on selling prices and export pricing.Understanding the factors that effect a forecast.
Detecting a Trend to a Loss in ProductivitySome people wake up one morning and find they can't compete. Usually this is a result of being asleep-at-the-wheel. These trends can be picked up before it gets to the point, where there is no easy way out.A real live example below with the name changed to protect the guilty.
Inventory costsGood concise reporting is the key guide to keeping this issue in focus. If the information is not readily available most people will be happy to ignore it. You want to know what you've got and what the rate of stock turns is for each product and raw material. The other headings here give a guide of key factors involved in controlling inventory.
Identification of the flow of Raw Material, Product in process and Storage, handling of incoming Raw Material and outgoing Finished goods. Optimisation to achieve best flow path.
Often a lot of lip service paid to this subject. I am usually wary of those companies with the 'four ticks'. Usually more piles of paper and waffle rather the the key the that counts. If your people don't have the right attitude then it is all nonsense.
Product Range Rationalisation - is about making money.Stock costs money - product variations reduce efficiency.This is something that has to be continually worked on. People put products on the range and some rarely want to take them off. Eventually they drown you. Emotional attachment tends to hold them there. Most get it - few face it.
We are good at this, and one of the reasons is that most companies are constrained by the company guy who scored 'big' with the one on the left and won't concede that things have moved on (to the one on the right - with the blood). As outside consultants we can be a little more objective.Still this whole business has to be handled with care. Sometimes you discover feature benefits in products (when you take the product off the range) that the company was not aware of - as sales people were not close to the customer.
Product - Off spec., RejectEveryone gets it - few act properly on it. Isolating the reasons and making improvements to the system is vital. A value should be placed upon this every month to focus attention on obtaining solutions. There are always solutions for those who looking ! Waste EliminationI'm always amazed how people will battle tooth-&-nail to get a 10% return and yet let a possible additional 1/4 to 1/3 or more of this be wasted in terms of product yields and raw material waste etc. without anybody really working up a sweat. There usually are solutions.
So how do we advise our clients to approach manufacture ?Well it does depend on each type of product but the following may give you an insight.Let's start the journey.If you went out and had a product made, it would wind up at a price 3 times that price that left your hands !This varies above and below this depending on whether it is a retail or industrial product, and the type of distribution etc.So an extra $1 from you can equate to an extra $3 for customer.Can you see the multiplier effect ?Why is this so - well distributors need their margin as do retailers etc.We have % on top of % A small difference at the start winds a big one for the customer.For low cost manufacture we advise a variety of approaches from, getting your local act sorted out, to having the product made in Asia. We are 'thinking out of the square' souls here !If you are an inventor or developer we can help you with your project.