Manufacturing performance - low cost and lean manufacturing

In an industry feeling the continuing impact of the financial downturn, finding ways to effectively increase productivity and take cost out of operations is key to commercial success. Falling market demand and continuing failure of many businesses impacted by the downturn requires strategic re-evaluation of the position in the value chain, strengthening negotiation skills and improving market awareness. Understanding the implications across supply chains can all help manufacturing companies to remain competitive in the global marketplace.

Recent consolidation supports the sector’s ability to influence the price of raw material input costs while companies can also seek to obtain synergies and economies of scale through the operation of vertically integrated raw materials sources (i.e. coal/iron mines). While recent falls in oil/energy prices have helped break the year long cost-price climb, non-raw material costs including the cost of manufacturing can still benefit from economies of scale in operations and the implementation of lean manufacturing techniques. The opportunity to reduce labour costs by investing in plants in low-cost countries is one factor encouraging moves to emerging market locations combined with the prospect of superior growth in China and the wider region.

How PwC can help you

Manufacturing organisations engage our Performance Improvement (PI) consultants to help design, manage and execute lasting cost reduction programmes. Our Operational Effectiveness experts - many directly from industry - draw on skills in operations, people, technology, finance and risk management to advise and implement lean manufacturing and cost reduction programmes - locally and globally.