Whether your business is in retail, services or manufacturing, profit is the name of the game.

In some industries, brand awareness and price premiums help pad profit margins (think Apple). In manufacturing, however, your reputation has less of an impact on margins and more of a potential impact on your ability to sell products. 

So, if brand awareness and price-setting don’t have as much significance in the manufacturing industry, what does affect your profitability?

4 Factors Impacting Manufacturing Profitability

Your profitability is dependent on a number of variables, but there are four that have the greatest influence:

1. The price of the market

How much you’re able to charge is the first and most obvious input for profitability. But, with greater commoditization in manufacturing, the prices you charge are relatively controlled by the market.

2. Product quality

You may not be able to charge a significant premium for high-quality products, but don’t make the mistake of risking reputational damage by delivering poor quality. If your customers have issues or inefficiencies because of variations in your product (typically caused by raw material or process variations), they could easily choose to buy from a competitor. And, of course, when there are fewer purchasers of your product, this directly impacts your bottom line. 

3. Cost control

Your costs are another overt variable in your profitability. Many, many costs encompass your total expenses, so your ability to keep these costs down in delivering your product is paramount to maximizing your manufacturing profit. 

4. Uptime and opportunity costs

Staving off downtime is a critical factor. If you’re unable to produce, that wasted time is an opportunity cost that could have been used to drive new revenue. 

Minimizing downtime is essential, and when you need precision grinding, your partner must be able to turn around a perfectly ground shaft, cylinder or roll as quickly as possible. 

How “Expensive” Is The Opportunity Cost Of Downtime?

In the past, we’ve written about the common cost of downtime and its impact on your production efficiency. Let’s examine the experience of a specific manufacturer we recently worked with:

Company X (as we’ll call them) had an emergency and needed precision grinding. Downtime cost them over $100,000 per day. Because Company X needed special cranes to remove a massive, 195,000-pound armature from their facility, as well as government permission to ship it on the highway, it took Company X several days to send their emergency to PRG.
 
Since the precision grinding service took less than 24 hours, their 125-inch-diameter armature literally spent more time on the road then in grinding, limiting Company X’s total opportunity and downtime cost.

In many cases, faster turnaround time comes at a premium. But, when downtime costs can reach into the hundreds of thousands of dollars, expedited services are essential to maintaining and maximizing your manufacturing profit.

While turnaround time is certainly critical, it would be careless not to mention that expedience is irrelevant if the grinding isn’t perfect and precise. Precision grinding extends the life of your rolls and reduces the frequency with which you need them maintained. When you do need roll grinding, keep your manufacturing profit in mind and ensure that the turnaround time is as minimal as possible.