Cost control in manufacturing: five challenges and how to overcome them

Nowadays, companies are constantly seeking ways to streamline operations. Especially in the ever-evolving manufacturing landscape that is driven by new technologies, increased productivity demands, and globalization, streamlining operations is more prevalent than ever. But doing so is easier said than done.

There are many challenges to overcome when optimizing operations as a manufacturer. Take complying to complex regulations as an example, or navigating diverse market conditions across subsidiaries. Central to all of these challenges is cost control, which is not only difficult, but also critical for business success in the current economic climate. In this blog, we discuss five challenges the industry is facing today, and what companies can do to overcome these challenges.

1. Managing and integrating high volumes of data

Many manufacturers face difficulties with data that is scattered across various systems, departments and subsidiaries. This dispersion commonly leads to data silos, causing inefficiencies and higher costs.

To address this challenge, it is vital to integrate systems and establish a single source of truth. By consolidating data and eradicating silos, manufacturing companies can streamline their processes to make better-informed decisions. Manufacturers can use platforms to centralize data from across departments, providing real-time insights into production, sales and stock levels. Such integration does not only enhance operational efficiency, but also results in significant cost savings by maximizing resource allocation and reducing waste.

2. Reliance on manual processes

Despite the technological advancements available today, a great number of manufacturers are still relying on manual methods and tools such as Excel to manage their data processes, often outside a unified system. This dependence on outdated tools is causing inaccuracies, inefficiencies and delays in financial closures and operational processes. As businesses grow and their data management demands become more complex, these issues hinder productivity and overall efficiency.

Automation is the cornerstone to solving this. By automating repetitive tasks, human errors are reduced, workflows are accelerated and operational costs are lowered. For example, a food manufacturer can accelerate production and avoid errors by adopting a tool to automate the collection and analysis of data, which allows for real-time tracking of production metrics and digital quality checks. Implementing such applications will enable companies to process data faster and make faster decisions, thereby achieving greater efficiency in the end.

3. Data quality

Even with integrated data, ensuring data quality and reliability remains a challenge. With unreliable, inconsistent data, companies may be unable to quickly respond to changes in the market, leading to lost opportunities and increased costs.

Implementing the right solutions helps to ensure that companies are working with reliable, up-to-date information. In addition, real-time data accelerates the decision-making process and aids in preventing costly errors. As an illustration, an electronics manufacturer can improve its production planning by using a system to provide real-time and reliable forecasts, which reduces the risks of overproduction and underproduction.

4. Efficiency, scalability, and flexibility

Like manual methods, legacy on-premise systems are still widespread in production. However, such systems have difficulty in meeting modern data demands. Often, they lack the scalability and flexibility required to handle increasing data volumes, particularly for manufacturers with multiple locations.

Transitioning into a hybrid cloud architecture can provide the scalability and flexibility needed to accommodate business growth, all while preserving critical local systems where necessary. This approach not only ensures smoother integration of legacy systems and improved overall efficiency, but offers enhanced data security and compliance with industry certifications, thus establishing robust security measures and guaranteeing regulatory compliance.

When a chemical manufacturer uses a hybrid cloud solution, for example, it is able to centralize data and reduce infrastructural costs while supporting international expansion. It will allow them to retain on-premise critical systems for sensitive data and applications that require low latency or have stringent regulatory requirements.

5. Compliance and sustainability

Manufacturers are facing increasingly complex and stringent international laws and regulations, notably in the area of sustainability. Non-compliance is likely to result in substantial fines, operational losses and reputational damage to both the company and its partners.

To address these challenges, companies will need to implement efficient compliance management systems. This all starts with centralizing, identifying and organizing data to ensure compliance with regulations such as ESG (Environmental, Social, and Governance) and CSRD (Corporate Sustainability Reporting Directive). Proper data management is crucial for accurate materiality calculations and comprehensive reporting.

Data-driven sustainability efforts not only simplify compliance but also lower costs through a more efficient use of resources. For example, a clothing manufacturer can comply with international regulations and reduce operational costs by using eco-friendly technologies and a centralized compliance management system. Such initiatives help meet regulations, cut long-term costs and preserve the company's reputation. Focusing on centralizing and organizing data increases the ability to comply with regulations such as ESG and CSRD, ultimately supporting sustainable growth.

Secure your future

Controlling costs in the manufacturing industry is without a doubt challenging due to a multitude of factors, such as inefficient data management and compliance risks. However, the right solutions and investments in technology hold the key towards overcoming these challenges. When you integrate systems, automate processes, and transition to scalable cloud solutions, it is possible to streamline operations, reduce costs, and stay competitive in an evolving market.

To secure your future in the industry, the time is now to invest in automation and technology to optimize cost control efforts.