The Rising Costs of Next-Gen Manufacturing and How to Offset Them

Manufacturers constantly battle cost control. The cost of materials and labor, or the cost of operation. The cost of unexpected downtime or an unnoticed defect. Every phase of manufacturing includes some element of cost control. It’s one of the biggest looming problems of Industry 4.0 and the reason many manufacturers have yet to dive into a more digital plant infrastructure. The costs are simply overwhelming.

Like the previous industrial revolutions, the cost of Industry 4.0 is enormous and will take decades to come to fruition. Despite this, it’s important for manufacturers to start making investments now. Not only will costs continue to rise, but early adopters will see the benefits of their investments play out sooner than those who wait.

A look at the costs of Industry 4.0

Rising costs are the norm. Inflation eventually drives the price of everything higher. But the shift into a digital manufacturing economy incurs a much higher cost than inflation can account for. The manufacturing economy of the future requires extensive upgrades, each with unforgiving upfront investments.

  • Technologies. Industry 4.0 is digital, which means building an entire digital infrastructure atop traditional manufacturing facilities and processes. The industrial internet of things (IIoT), machine learning software, augmented reality (AR) and virtual reality (VR) technologies, and a cloud security system are all capital investments costing millions.
  • People. The cost of labor in manufacturing’s next revolution is substantially higher than many other sectors of the economy. Data scientists, computer engineers, robotics programmers, software developers, and the like all have salaries broaching six-figures per year. Moreover, much of the economy will be built on the backs of these skilled intellectuals, which means a more robust staff.
  • Materials. Scarcity is coming into play more than ever before when it comes to materials. Globalization is creating more competition for the materials that are available. These factors, together, have sent the price of materials skyrocketing.

Offsetting the core costs of industrial revolution

Despite the unavoidable costs of Industry 4.0, there are ways to offset them. Taking a smarter approach to operations can help reduce the cost of capital investments by exemplifying their immediate returns. It’s about making the most of unavoidable investments.

  • Automation. You’re already making investments in digital technology. Make automation a priority of that technology. Automation can reduce costs in other areas of traditional operation, such as man-hours or in reducing defects. Automation also reduces waste, which is a direct cost contributor.
  • Innovation. Finding ways to do things better usually means being able to do them more efficiently. Efficiency is a direct offset to cost. Evaluating processes or taking the time to build good processes with new innovations is one of the best ways to immediately capitalize on capital improvements.
  • Supply chain. It’s important to control the supply chain. With rising material costs and smarter supply chain technologies available, supply chain optimization can inhibit costs and streamline operations.

Building a factory for the future, affordably

It’s hard to control direct manufacturing costs. You can’t decide how much to pay for enterprise software or attract top talent on a meager salary. But you can control indirect costs by finding a way to minimize them. Developing a new cost-efficient process may have positive effects on the bottom line, for example.

There’s no getting around capital investments. Industry 4.0 demands a smarter factory. Smart manufacturers are updating quickly, which means they will see returns quickly as well. And, to offset capital costs along the way, they’re finding smarter ways to lower indirect implications.

Looking for another way to cut costs without compromising on quality? Partner with the professionals at Global Electronic Services. Contact us for all your industrial electronic, servo motor, AC and DC motor, hydraulic, and pneumatic needs — and don’t forget to like and follow us on Facebook!
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