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Chef d'équipe qui présente à son équipe les stratégies pour réduire les coûts de production

How to Reduce Production and Manufacturing Costs

When production costs are too high, companies struggle to make a profit. Cost reduction is important to all factory and business owners.

There are several ways to get around this problem. In fact, you can take action right away to reduce production costs by improving company efficiency.

Keep reading to learn 5 proven methods for reducing production costs in business.

Production cost analysis

The first step in reducing production costs is analyzing the production process. This is essential so that you can identify your most significant expenses and target them with cost reduction strategies.

What are the benefits and limitations of the different methods of production cost analysis?

There are several methods of analyzing production costs, each with advantages and disadvantages. Let’s look at a few examples:

Standard costs

This method involves budgeting costs for each step of the production process based on normal company operations. The advantages of this method include the ability to predict production costs, to quickly identify variances between actual and expected costs, and to motivate employees to improve production efficiency. On the other hand, it can be difficult to establish standard costs for each stage of production and there is always the risk that standard costs will be considered targets to be achieved rather than tools for analysis.

Historical costs

This method involves calculating the costs of raw materials, labour, and other expenses from past data. It can be easy to do, and the cost estimations will always be accurate since companies have access to historical data. Limitations of this method include problems identifying waste and hidden costs, and the fact that historical costs do not reflect any production improvements.

Direct and indirect costs

This method separates direct costs (e.g., raw materials and labour) from indirect costs (e.g., plant rental costs and maintenance costs). This makes it possible to track production costs at a granular level and make accurate cost reduction decisions. It can be difficult, however, to determine which costs should be classified as direct or indirect, and there is a risk that some indirect costs will be missed.

5 ways to reduce production costs

Companies need to find ways to reduce production costs to improve their profitability and gain a competitive edge in the market. The challenge lies in finding a balance between reducing costs and maintaining product or service quality. Let’s take a look at the key factors in efficiently and sustainably minimizing production costs.

1. Know your business inside out

To begin, you need a global vision of the physical and information flows in your company or plant. Without a good understanding of your business, it is virtually impossible to identify where you can reduce production costs.

These are the main factors:

Raw materials

To manufacture a product, you need raw materials. These components are an integral part of your production costs.

The most expensive raw materials are steel, oil and forestry resources. Glue is also expensive to produce, and therefore to acquire.


Machines are essential to the production process, and expenses related to buying and maintaining them must be factored into production costs. Installing, moving and building products and other equipment all requires industrial machinery.

Machinery includes drills, mixers, and forklifts for construction sites. Some companies need rock crushers or steel rolling mills for making materials such as rebar for concrete walls.


Manpower is another major element of production costs. A strong workforce is essential to the operation of a business at any level.

Labour costs apply to all stages of the manufacturing process, including receiving and storing raw materials, and processing and assembling finished products.


Energy costs include all energy used to operate production facilities.

Gas, oil and coal may be categorized as raw materials or factored as energy costs. Space heating, central cooling systems and emergency lighting are examples of other common energy costs.

2. Optimize your production line

You can often reduce production costs by taking a closer look at the production line of your facility.

Identify waste, irregularities and excesses in production to improve product quality. Adjusting the production line will result in fewer checks, which will lead to faster delivery times. This is also good for your company’s image!

Some common production line malfunctions include:

  • Machine stoppages: to avoid these, carry out regular surface finishing treatments
  • Material losses: update machinery and verify operating parameters
  • Moving time: optimize the available space
  • Quality defects: enforce control procedures.

3. Improve and optimize your facilities

Improving facility layout and keeping spaces clean are effective ways to reduce production costs. These adjustments are often underestimated but can have a significant impact.

By optimizing available space and carefully choosing the location of equipment, employees can move around more easily, quickly, and safely. This allows you to save time on production, and everyone knows that in a company, time is money.

Regular and efficient cleaning makes equipment last longer and increases its productivity. Rely on an industrial cleaning company who knows exactly how to take care of your machinery for maximum performance quality.

Use the latest technology

Recent technological developments offer new ways to optimize businesses, production spaces and machinery, making production more efficient than ever. Use up-to-date software to manage inventory, sales data and employee information. You can save precious time!

When it comes to plant cleaning, professionals can offer you innovative solutions adapted to your machinery. Effective new professional cleaning methods include:

Increase productivity

To reduce production costs, take employee well-being into account. Consider doing the following:

4. Limit your inventory

Excess inventory and poor inventory management are a common cause of unnecessary expenses. One way to avoid this is by opting for a “just-in-time” production management system.

This method allows you to reduce costs by waiting for a customer’s order before starting to produce it. You won’t have to manage inventory that may not sell, which can significantly increase your overall profit!

5. Reduce external costs

Last, you can reduce production costs by examining your external costs.

Whether it’s concerning supply management or the providers you use, review each of your expenses and find better options if you can. There are many offers on the market, and it is important to choose the most cost-effective one for you.

How to find cheaper suppliers for raw materials

Finding cheaper suppliers for raw materials can be a complex process, but it can help a company significantly reduce production costs. Here are a few suggestions:

  1. Search online: Search engines and online directories can be valuable resources for finding cheaper suppliers. It is important to compare prices and to consider quality before making a commitment.
  2. Attend trade shows: Trade shows can be an opportunity to meet potential suppliers in person, see their products and discuss their prices. Trade shows also provide an opportunity to learn about new products and innovations.
  3. Use professional networks: Professional networking can be a great way to find cheaper suppliers for raw materials. Trade associations, business clubs, and online forums can provide an opportunity to meet other industry professionals and learn about their suppliers.
  4. Negotiate prices with current suppliers: if a company already has suppliers, they could negotiate prices to reduce costs. It is important to be diplomatic and to offer strong arguments when trying to convince suppliers to lower their prices.

Use various methods to reduce production costs

Following these suggestions will help you reduce production costs and increase your profits.

Using energy efficient equipment and maintaining your industrial plants are two ways to significantly reduce your costs in a sustainable way. You could even go green by printing your invoices on recycled paper!

If you want to benefit from professional industrial cleaning services to further reduce production costs in your plant or business, contact us! We will be happy to answer your questions.