Manufacturing costs are the resources that you use during the conversion of raw materials into products. They include cost associated with manufacturing material, direct labor and overhead costs like salaries and wages, insurance, utilities and repair costs among others. High manufacturing costs usually result in high product prices hence poor competitiveness and low profit margins.
The quickest way to reduce production costs is to increase the production volumes but that can only happen if you are ready and have the resources to scale up. Others go as far as negotiating with suppliers to lower the price of raw material, remove excess packaging or even encourage employees exceed their targets.
Technology is changing the way everything is being done including the manufacturing business and it is time that manufacturers leverage tech like SaaS to reduce their cost of production. SaaS or Software as a Service is a form of software distribution in which a third party hosts applications in the cloud and makes them available to customers online.
As a customer, you are required to subscribe and pay monthly, quarterly or yearly fees depending on the pricing model that you choose. So, how can SaaS tools help you in reducing your manufacturing costs?
Easy and cheap access cutting-edge software applications
In this new age of manufacturing, the rate at which technology is being integrated into every part of manufacturing is growing very fast. Highly efficient and flexible techs like artificial intelligence, internet of things as well as virtual and augmented reality are setting the stage for smart factories.
Manufacturing tech trends like automation, 3D printing, nanotechnology and simulation require a good IT infrastructure in order to run them. Setting up such an in-house IT infrastructure can be very expensive especially given that you will need to scale it up from time to time. With SaaS, your will enjoy the benefits of any software application without the burden of expensive hardware, maintenance and having to deal with third party vendors.
Share and process data quickly and efficiently
SaaS is becoming indispensable for many manufacturers because it allows easy and efficient sharing of data. This is especially good if you have manufacturing plants that are spread in various geographical areas because you will be able to access everything at any time from everywhere.
In this way, you will increase the speed of production, gain greater quality control and reduce production costs. Big data and predictive maintenance is carried in many manufacturing factories today SaaS will enable you access to technologies for collecting, processing and measuring big data in real time. Companies like Weiss-Aug custom assembly solutions use a central software system to monitor all its production for efficient operations in its design manufacturing.
Automation is an industrial revolution that has greatly helped in increasing productivity and reducing overhead costs. With SaaS you get access to tools that will allow you to automate the routine areas of your manufacturing process. With a tool like Clockspot, you can automate routine stuff that you hate, monitor and track your employees remotely and save on labor costs by keeping them your employees honest.
Get most current version of software
Scalability is very important for any IT infrastructure and this is something that you don’t get to worry about when you embrace the SaaS model. This is because you applications are not only customized but also updated as soon as the new versions are released enabling you to always use the most current version of the software.
When you integrate efficient technologies like SaaS tools in your manufacturing processes you increase efficiency, reduce labor costs and reduce waste. You will also improve the quality of your products hence reduce production costs while your products will remain competitive in the market.