Increase Profit Margins in Manufacturing
Increasing profit margins in manufacturing is critical to keeping pace in this fast-paced, competitive industry. It adds to your bottom line and your ability to invest in growth. It improves your financial standing in the market, and it is a clear indicator of financial health for your stakeholders and investors.
Yet, rising costs, fierce competition, and ever-evolving market forces threaten to erode your hard-earned margins.
How do you squeeze more profit out of every sale? Without reducing prices and product complexity? Read on for some game-changing insights from our manufacturing experts.
Running a successful manufacturing business requires a delicate balance between business costs and delivering high-quality products and services to your customers. Being able to strike this delicate balance makes or breaks your profit margin.
In other words, the better you are at managing costs of goods sold and operating expenses, the greater your revenue, and the higher your profit margin.
There are, of course, a number of factors in manufacturing that you can’t control. For example, your cost of goods sold; raw material prices, labor costs and energy expenses are always in flux. Your regulatory compliance expenses differ by location and product and service. And your competitors are always exerting downward pressure by offering similar products at lower prices.
What impacts your profit margin that you can control?
Add it all up, and you’re looking at the ideal formula for increasing your operating expenses, not your profit margins.
To increase profit margins, some manufacturing companies focus on raising prices; which quickly alienates customers. Or they turn to reducing product complexity, which, if not carefully planned and executed, quickly drives up quality issues and customer dissatisfaction.
How do you increase your profit margins without raising your prices or simplifying your offerings? An effective way to increase profit margins in manufacturing is to reduce your operating expenses; the time and resources it takes to manage and sell your complex products and services.
Begin with best practices for cost optimization in manufacturing that reduces expenses:
The manufacturing process is dynamic and complex. It involves sequential activities that involve multiple experts. And everything is subject to variations based on product, market segment, customer, and time. Technology can optimize your expense investment as well as boost your sales revenue.
Continue by implementing technology that drives productivity to increase sales:
Increasing profit margins in manufacturing is critical to keeping pace in this fast-paced, competitive industry. Imagine a world where efficiency minimizes your operating expenses. Where sales productivity increases your revenue. Where consistently striking the delicate balance between business costs and delivering value to your customers increases your profit margins. And customers clamber for more.
Learn how Configure-Price-Quote (CPQ) software helps you regain control of your sales cycle - and get your team back on track and increase your profitability in manufacturing.
Related Article: How CPQ Helps Manufacturers Accelerate Quoting
Paul, has been entrusted with helping to grow the North American market for XaitCPQ. He has more than 15 years of successful experience as an entrepreneur and senior sales leader in technology and financial services. He enjoys almost any outdoor activity as well as extolling the virtues of vinyl compared to digital music with anyone who will listen. Paul is a graduate of the University of Massachusetts and lives in Boston with his wife and two kids whom they love dearly even though they regularly demolish their house, eat all of their food, and never let them sleep.