Reducing operational costs is a major concern for manufacturers, and reducing these costs without sacrificing quality or efficiency is a top priority for staying competitive. From automating processes to improving supply chain management, there are a number of practical ways manufacturers can streamline operations and reduce unnecessary spending. Below are ten proven strategies that can help you cut costs and boost profitability in your manufacturing business.
1. Automate Repetitive Tasks (Save up to 30%)
From the shop floor to the back office, streamlining repetitive tasks through automation helps manufacturers reduce manual errors, speed up operations, and cut labor costs. Smart automation frees your team to focus on strategic, high-impact work. Automation can reduce operational costs by up to 30%, according to a study by McKinsey & Company.
Where It Helps
- Production: Robotics, sensors, visual inspection
- Inventory: Real-time tracking, reorder automation
- Admin: Payroll, billing, vendor payments
Recommended Tools
- QuickBooks – Automate invoicing & expenses
- Gusto – Streamlined payroll and HR automation
- Zapier – Connect apps and workflows (e.g., email → task)
- Katana ERP – Automation built for manufacturing
- Fishbowl – Inventory and order automation
Training & Resources
- Book: Automate Your Busywork by Aytekin Tank (Small Charge)
- Video: How to Automate Tasks in Manufacturing (Free)
- Course: Robotic Process Automation – Udemy (Small Charge)
- Course: Business Automation – LinkedIn Learning (Free Trial Available)
Explore More On Automating Repetitive Tasks at Manufacturing International
Want more detail on how automation fits into your ops strategy? We’ve got a guide just for you:
How to Automate Manufacturing Processes Without Breaking the Bank (coming soon)
2. Implement Lean Manufacturing Principles (Save up to 25%)
Lean manufacturing is a proven strategy to streamline operations, eliminate waste, and enhance value for customers. By focusing on continuous improvement and reducing non-value-added activities, Lean Manufacturing can cut production costs by up to 25%, according to IndustryWeek. It’s not just a methodology—it’s a mindset that reshapes how teams think, plan, and execute across the factory floor and beyond.
Where It Helps
- Production: Waste reduction, continuous flow, visual management
- Inventory: Just-in-time stocking, Kanban systems
- Process: Value stream mapping, root cause analysis
Recommended Tools
- Asana – Streamline lean workflows and task tracking
- Expensify – Trim down non-essential expenses
- Tulip – No-code apps to digitize lean operations
- Kanbanize – Lean project management built for manufacturers
- Lucidchart – Map and optimize value streams visually
Training & Resources
- Book: Lean Thinking by James P. Womack & Daniel T. Jones (Small Charge)
- Video: Intro to Lean Manufacturing – EMS Group (Free)
- Course: Lean Production – Coursera (Free Option Available)
- Course: Lean Management – Udemy (Small Charge)
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Curious how to roll out lean in a small or mid-sized operation? Check out our step-by-step guide:
Lean Manufacturing for Small Manufacturers: From Theory to Execution (coming soon)
3. Outsource Non-Core Activities (Save up to 30%)
Outsourcing non-core business functions—like IT, HR, payroll, and accounting—can slash operational costs by up to 30%, according to Deloitte. By delegating these tasks to trusted partners, manufacturers can sharpen their focus on core operations and strategic growth while streamlining workflows and reducing overhead. Lean tech like Bill.com makes it even easier to manage outsourced tasks efficiently.
Where It Helps
- Finance: Bookkeeping, payroll, accounts payable
- IT: Cloud infrastructure, cybersecurity, helpdesk support
- HR: Benefits administration, recruiting, compliance
Recommended Tools
Training & Resources
- Book: The Outsourcing Revolution by Michael F. Corbett (Small Charge)
- Video: Why Smart Companies Outsource Non-Core Work (Free)
- Course: Business Process Outsourcing – Udemy (Small Charge)
- Course: Global Outsourcing – Coursera (Free Option Available)
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Ready to scale operations without inflating headcount? Start with our expert guide:
Outsource Smart: The Manufacturer’s Guide to Non-Core Optimization (coming soon)
4. Optimize Energy Consumption (Save up to 20%)
Energy accounts for up to 15% of total manufacturing costs—making it a prime target for savings. Conducting an energy audit and upgrading to more efficient systems can cut energy expenses by as much as 20%, according to the U.S. Department of Energy. Whether it’s improving lighting, HVAC, or machine usage, small changes can yield measurable impact.
Where It Helps
- Facility: HVAC optimization, LED retrofits, power management systems
- Production: Variable frequency drives, idle time reduction
- Utilities: Real-time energy monitoring and usage dashboards
Recommended Tools
- Enertiv – Real-time energy intelligence platform
- ENERGY STAR Portfolio Manager – Benchmark energy usage
- Ecova (ENGIE Insight) – Utility optimization services
- GridPoint – Energy analytics and automation
- Schneider Electric – Smart energy solutions for manufacturing
Training & Resources
- Book: Guide to Energy Management by Barney L. Capehart (Small Charge)
- Video: How to Perform a Building Energy Audit (Free)
- Course: Energy Management Systems – Udemy (Small Charge)
- Course: Energy Production & Efficiency – Coursera (Free Option Available)
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Want to boost efficiency and sustainability without major capital investment? Start here:
Top Energy Optimization Strategies for Manufacturers (coming soon)
5. Use Inventory Management Tools (Save up to 10%)
Inventory inefficiencies quietly drain profits. According to Inventory Management Experts, using effective inventory management tools can reduce storage costs by up to 10% and improve cash flow by 20%. By leveraging smart software platforms like Coupa, manufacturers gain greater control over purchasing, reduce excess stock, and optimize reorder points—freeing up capital and warehouse space.
Where It Helps
- Procurement: Automate POs, improve vendor visibility
- Warehousing: Monitor stock levels in real-time
- Finance: Reduce holding costs and free up cash
Recommended Tools
- Coupa – Comprehensive spend and inventory management
- NetSuite – ERP with robust inventory controls
- QuickBooks Commerce (TradeGecko) – Inventory + order management for SMBs
- inFlow Inventory – Simple tool for tracking stock and sales
- Zoho Inventory – Affordable inventory management platform
Training & Resources
- Book: Definitive Guide to Inventory Management (Small Charge)
- Video: Inventory Management Basics – YouTube (Free)
- Course: Inventory Management – Udemy (Small Charge)
- Course: Supply Chain Operations – Coursera (Free Option Available)
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Want deeper control and better decision-making across your inventory? Start here:
Inventory Optimization Strategies That Free Up Capital (coming soon)
6. Improve Supply Chain Management (Save up to 20%)
Inefficient supply chains create bottlenecks, cash flow crunches, and excess costs. Research by Deloitte shows that effective supply chain management can reduce operating costs by 10–20%. Tools like Float offer real-time cash flow forecasting, helping manufacturers strike the right balance between supply and demand—without tying up capital unnecessarily.
Where It Helps
- Logistics: Track shipments, reduce lead times
- Inventory: Align supply with demand in real-time
- Finance: Improve forecasting and reduce carrying costs
Recommended Tools
- Float – Cash flow forecasting for smarter supply decisions
- ShipBob – Fulfillment partner with real-time inventory tracking
- One Network – End-to-end supply chain platform
- Agistix – Visibility and risk management for logistics
- Katana – Smart manufacturing ERP with supply chain visibility
Training & Resources
- Book: Essentials of Supply Chain Management by Michael H. Hugos (Small Charge)
- Video: What is Supply Chain Management? – YouTube (Free)
- Course: Supply Chain Management – Coursera (Free Option Available)
- Course: Supply Chain Principals – Coursea (Small Charge)
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Want to boost your supply chain performance and resilience? Here’s where to start:
Smarter Supply Chains: Tactics That Drive Cost Control (coming soon)
7. Preventative Maintenance (Save up to 18%)
Unplanned downtime can derail production and drain profits. According to a study by the International Society of Automation, implementing a preventative maintenance program can reduce total maintenance costs by 12–18%. By scheduling regular inspections and service, manufacturers can extend equipment life, avoid unexpected failures, and keep operations running smoothly.
Where It Helps
- Production Equipment: Identify wear before failure
- Facilities: Keep HVAC, compressors, and lighting efficient
- Fleet: Maintain delivery or service vehicles proactively
Recommended Tools
- Fiix – Cloud-based CMMS for scheduling and tracking
- Maintenance Manager HQ – Preventative maintenance software
- UpKeep – Mobile-first asset management and PM tracking
- ICML – Industry standards and certifications for machinery care
- EcoStruxure Maintenance Advisor – Predictive & preventive diagnostics
Training & Resources
- Book: Implementing Preventive Maintenance (Small Charge)
- Video: Preventive Maintenance: Introduction – YouTube (Free)
- Course: Preventive Maintenance Strategy – Udemy (Small Charge)
- Course: Top Maintenance Management– Udemy (Free Option Available)
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Looking to reduce downtime and avoid costly breakdowns? Start here:
Smarter Maintenance for Smarter Manufacturers (coming soon)
8. Reduce Material Waste (Save up to 10%)
Material waste silently eats away at profits. According to the World Resources Institute, it can account for 4–10% of total production costs. By auditing your processes, using precise forecasting, and launching recycling or reuse initiatives, manufacturers can significantly reduce waste while improving margins and sustainability.
Where It Helps
- Production: Minimize scrap and rework with better precision
- Procurement: Avoid overordering with accurate demand planning
- Waste Management: Reuse byproducts or recycle for value recovery
Recommended Tools
- Leanpath – Waste tracking and reduction system
- Material Exchange – Smart sourcing and circular material database
- RapidMiner – Use data science to predict material inefficiencies
- Zero Waste Store – Industrial-grade waste reduction tools
- Samsara – Real-time monitoring to reduce raw material waste
Training & Resources
- Book: The Lean Waste Guide by Paul Myerson (Small Charge)
- Video: Reducing Manufacturing Waste – YouTube (Free)
- Course: Top Lean Manufacturing Courses – Udemy (Small Charge)
- Course: Sustainable Resource Management – edX (Free Option Available)
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Looking to cut costs and improve your sustainability metrics? Explore our full guide:
Zero Waste Manufacturing: Practical Tactics That Work (coming soon)
9. Leverage Cloud-Based Solutions (Save up to 40%)
Moving to the cloud can unlock major cost savings and operational flexibility. According to Gartner, cloud adoption in manufacturing can reduce IT infrastructure costs by 30–40%. Cloud-based platforms like Xero enable manufacturers to access real-time data, collaborate remotely, and eliminate the need for expensive on-site servers and maintenance contracts.
Where It Helps
- Finance: Cloud accounting, forecasting, and cash flow visibility
- IT: Reduce physical infrastructure and support costs
- Collaboration: Real-time access for teams, vendors, and consultants
Recommended Tools
- Xero – Cloud-based accounting for manufacturers
- QuickBooks Online – Bookkeeping and payroll in the cloud
- Microsoft 365 – Cloud productivity and collaboration suite
- Katana – Cloud ERP built for manufacturing
- AWS for Manufacturing – Infrastructure, analytics, and scaling tools
Training & Resources
- Book: Cloud Computing from Fundementals to Advanced (Small Charge)
- Video: What Is Cloud Computing? – YouTube (Free)
- Course: Cloud Computing Fundamentals – Udemy (Small Charge)
- Course: Cloud Computing – Coursera (Free Option Available)
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Need help picking the right cloud platform for your shop? We’ve got a guide coming soon:
Cloud Solutions That Help Manufacturers Cut Costs & Scale (coming soon)
10. Focus on Employee Training and Retention (Boost Profitability by 24%)
Skilled, loyal employees are one of the best investments manufacturers can make. According to LinkedIn Learning, companies that invest in employee training see a 24% higher profit margin. Meanwhile, the Society for Human Resource Management (SHRM) reports that reducing turnover can save up to $15,000 per employee. A commitment to development and retention leads to a more productive, stable, and cost-effective workforce.
Where It Helps
- Production: Train for safety, quality, and productivity
- Onboarding: Reduce ramp-up time for new hires
- Retention: Offer development paths to reduce turnover
Recommended Tools
- LinkedIn Learning – Professional training across departments
- Udemy Business – Skills training for technical and soft skills
- 360Learning – Collaborative learning platform for manufacturers
- Workforce.com – HR software with training and scheduling tools
- Microsoft Learn – Free technical upskilling on Microsoft tools
Training & Resources
- Book: The Expertise Economy by Kelly Palmer & David Blake (Small Charge)
- Video: Why Investing in Employees Pays Off – YouTube (Free)
- Course: Learning How to Learn – Coursera (Free Option Available)
- Course: Employee Training & Development – Udemy (Small Charge)
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Want to build a more resilient and capable team? Start here:
Your Guide to Workforce Retention & Skills Development (coming soon)
Conclusion
Reducing operational costs is key to maintaining profitability in a competitive manufacturing landscape. By implementing these ten strategies, you can streamline your processes, improve efficiency, and significantly lower unnecessary expenses. Many of the solutions mentioned above, such as automation tools and cloud-based platforms, offer not only cost-saving benefits but also have affiliate opportunities that can provide even more value to your business.
By adopting these practical strategies and leveraging the right tools, your manufacturing operation can thrive while minimizing operational costs. If you’re interested in any of the software tools mentioned, be sure to check out our affiliate partner page for more details on how these solutions can fit into your business strategy.