Tips To Control Shoe Manufacturing Costs

Tips To Control Shoe Manufacturing Costs: Complete Guide

Shoe manufacturing involves various stages, each of which involves several costs. Controlling costs is essential to maximizing profitability and maintaining market competitiveness. You’ll need to manage and monitor your costs while constantly meeting customer needs.

Control Shoe Manufacturing Costs

In this detailed guide, you will find various tips on controlling your shoe manufacturing costs.

How To Control Costs In Each Shoe Manufacturing Stage

Controlling costs when running your shoe business is essential to be able to make profits and, at the same time, compete in the market. However, cutting costs and manufacturing high-quality shoes can be challenging. You can use several strategies to reduce business costs without compromising quality.

Design Stage

Always ensure that you work with professional designers who create feasible designs. You don’t want to proceed with production only to discover that the shoes are not functional. You will have invested a lot of capital in the shoe manufacturing stage, which will all go to waste if you can’t sell the shoes.

 

A professional designer will also help you to have simple designs that don’t require a lot of components. Simple designs will also help to minimize material wastage and labor expenses. If hiring a designer is too expensive, you can use computer-aided designs(CAD).

 

Making physical prototypes is another cost, considering that most are free. Replace them with digital models to save time and costs for sending the physical prototypes to customers. You can share the digital models, and clients can approve their buying based on that.

Raw Material Sourcing

 

1 Raw Leather

1 Raw Leather

Raw materials are one of the most expensive costs for any shoe manufacturer. Materials such as fabrics, leather, rubber, and foam will need careful sourcing for quality. When sourcing raw materials, you should consider the following:

 

  • Identify the right supplier: You need a reliable supplier who delivers raw materials on time and in quantity. Buy raw materials in large quantities from suppliers willing to give you discounts. You should also deal with suppliers who are willing to negotiate. HYD Shoesonly source their raw materials from reliable suppliers.
  • Choose high quality over low: Research where to get raw materials that will offer you the same level of performance at a lower cost. However, always choose quality over price to avoid incurring a lot of material wastage. Look for ways to get high-quality raw materials at lower costs.
  • Availability of the material: The materials will be more expensive if they are not readily available in your locality. Raw materials are easily available in China, making it one of the countries with many shoe manufacturers. You should look for an alternative where a particular raw material is not readily available.

Production Stage

Source high-quality materials to avoid unnecessary expenses and retain consistent workflows. Any stoppages during the workflow, as you try to correct errors due to using low-quality materials, will result in costs.

 

Minimizing waste production during production is one way of reducing costs. You can only do this by first implementing efficient production processes. Always ensure you have skilled workers who use the materials correctly, avoiding wastage. Choose environmentally friendly materials.

 

Improve workflow processes to ensure no idle times for the machines and the employees. You can do this by having enough raw materials so that production flows. Please remember that you will still have to pay the employees even if they are not working and have reported to work.

 

Identifying possible defect areas in the early stages of the production processes will minimize having to rework.

Labor Costs

 

2 An Employee in a Shoe Factory

workers using a handtool to working on shoe component in footwear factory
workers using a handtool to working on shoe component in footwear factory

Labor costs include salaries, benefits, overtime, and employee wages when manufacturing shoes. They usually amount to up to 35% of a shoe manufacturing company’s total operating costs. How much you pay your employees will depend on their experience and skill level. HYD Shoes invests in continuous worker training by having a professional team.

 

However, ensure that you only engage employees your business can comfortably pay. In most instances, your sales will determine how many workers you can employ.  Most shoe-selling companies outsource their shoe manufacturing needs to China, where labor costs are significantly lower.

 

Investing in advanced technology can lower costs. Automated machines can cut, stitch, assemble, and package, reducing the need for manual workers. However, the initial investment cost of buying machines is high.

 

Ensuring that work conditions are conducive for your employees helps reduce staff turnover. You will avoid incurring the cost of recruiting and training new staff. Motivating your employees by having performance incentives keeps them motivated, enhancing productivity.

Operational Costs

 

3 A shoe-making utilizing a small space

sneaker shoe making in footwear industry
sneaker shoe making in footwear industry

Rent and utilities are some of the costs you’re likely to incur in shoe manufacturing companies. They will likely affect your bottom line if you don’t control them well. Your rent cost depends on size, space conditions, and location.

 

One of the ways to reduce shoe manufacturing costs is to look for locations with lower rents.

 

Utility costs include power and water and will vary. They might be about 4% of the total cost of sales. Shoe manufacturers pay higher power consumption bills for using heavy equipment and machinery.

 

To avoid high power bills, train employees on proper usage, such as not leaving lights or machines on when not in use. Conduct regular maintenance on the machines. Alternatively, use solar energy to reduce your power consumption.

 

Reduce water usage and wastage by developing ways to recycle or reuse. Wastewater treatment and rainwater harvesting are some ways you can cut down on water costs.

Stock Costs

You must have enough raw materials to run your shoe manufacturing operations successfully. However, you must also ensure that your stock inventory costs are not high. Work closely with your suppliers to avoid over- and undersupply of raw materials. Only have inventory that you will use for a certain period.

 

By having a just-in-time inventory management system, you will minimize inventory carrying costs. You can have certified software to help manage your stock in real-time. Ensure you arrange your stock in sections to find them quickly and not have to buy what you already have.

 

Grouping orders that require the same materials will help you buy in bulk and enjoy discounts. It will also save you from holding inventory that you’re not using.

Transportation Costs

 

4 A local shoemaker

Cropped picture of young shoemaker in workshop making shoes.
Cropped picture of young shoemaker in workshop making shoes.

Packaging and transport costs can also affect profitability. If not well managed, these costs can add up quickly. Packaging costs include labels, tapes, boxes, and other packing materials.

 

Transportation and shipping costs can also vary. The weight and size of the packages will determine the shipping cost. The client’s distance and shipping method will also affect your costs. Shipping carrier rates and fuel can fluctuate, affecting transport and shipping costs. It’s essential to consider unexpected price increases and shipping rates when budgeting.

 

Experiment and research the safest and cheapest shipping methods and packaging. You can also buy packaging items in bulk and take advantage of discounts. Negotiate rates with your shipping suppliers, thereby reducing costs over time. Consider transporting packages to the exact location simultaneously, even for different clients, to save on shipping costs.

Conclusion

Managing your shoe manufacturing costs is a big plus for your business. You must continuously monitor your costs when running your shoe manufacturing business. Using cost-cutting measures and various ways to save will improve your profitability.

 

Consult with  HYD Shoes, one of the leading shoe suppliers and manufacturers, to learn more about shoe manufacturing. We have various skilled and professional workers to help meet your needs.

 

 

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