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Some non traditional cost cutting measures in manufacturing facilities

Anonymous A

Dear Experts ,

Can you list some non traditional Cost cutting measures specifically in manufacturing facilities ( apart from the traditional rent negotiations/ reducing labor etc. )

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Andrea
Expert
replied on 04/02/2018
Former BCG decision round interviewer with 300+ real interviews in 8 years

Some ideas below:

1) Assess factory floor layout and redesign according to lean principles (this can be done at different levels of cost) to increase yield, reduce switching costs

2) Manufacture during low electricity cost hours (if they do not have a flat tariff)

3) Re-distribute production across different factories according to relative production efficiency

Hope it helps,

Andrea

Carlos replied on 04/04/2018

I propose the following structure:

1. Labour cost

  • Reduce number of employees: improve automation, training.
  • Reduce cost/employee: reduce salaries, overtime, contribution of company to health insurance

2. Equipment cost

  • Reduce number of equipment: reduce idle time, increase utilization rate.
  • Reduce cost/equipment: reduce depreciation, maintenance, economies of scale.

3. Raw material

  • Reduce number of raw material units: reduce waste.
  • Reduce cost/raw material unit: reduce inventory, renegotiate with suppliers.

4. Energy consumption

  • Reduce number of energy units: introduce measurements to reduce energy consumption, renew equipment, improve maintenance.
  • Reduce cost/energy unit: renegotiate with energy suppliers, increase energy consumption during valley period, self-production.
Vlad replied on 04/02/2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

A lot of areas with different initiatives inside:

  • Outsourcing the support functions
  • Purchasing optimization
  • Capex optimization
  • Shared services for sg&a
  • Lean production (Although it's a lot about labor)
  • Defect rate optimization
  • Maintenance optimization
  • Transportation
  • Utilities optimization

Best

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