In any industry, balancing production cost efficiencies is essential for business sustainability. As demand for aesthetically pleasing, durable, and eco-friendly ceramic products rises, manufacturers face increasing pressure to deliver without compromising quality or profitability. However, the ceramic industry has recently encountered several macroeconomic challenges, such as volatile gas prices, global supply chain disruptions, and geopolitical issues. Achieving balance is not easy — it requires smart coordination across multiple business functions, from sourcing raw materials and managing supply chains to optimising product design and leveraging technology for cost-effectiveness at every step.

Importance of cost control

Cost control in the ceramic industry is not merely about reducing expenses; it's about producing high-quality products in the most efficient and sustainable way while maintaining profitability. With fluctuating prices for raw materials like clay and feldspar, increasing energy and labour costs, and the need for investment in technology, managing costs is vital to the financial health of any business.

Even small inefficiencies in ceramic manufacturing can significantly affect profit margins. Therefore, the ability to manage these costs is essential for staying competitive. However, with production processes becoming more complex, achieving this balance is increasingly challenging.

Key challenges

The ceramic industry faces numerous challenges in cost control. Fluctuating raw material costs, particularly for imported goods, can be impacted by political instability, changing trade policies, currency exchange rates, and high taxes. In domestic supplies, freight costs play a crucial role due to the volumetric nature of the products, and any fluctuation in these costs can affect pricing.

The energy-intensive firing process poses a particular challenge, with gas prices contributing up to 30 per cent of production costs. Any price volatility in imported gas can put extreme pressure on pricing. Additionally, inefficient production due to outdated machinery, inconsistent product quality, or waste can lead to unnecessary downtime and increased costs.

Production bottlenecks, caused by issues like transportation delays, poor coordination with suppliers, or inconsistent raw material quality, can also drive up costs. Overcoming these challenges requires a comprehensive approach that focuses on both internal processes and external coordination.

Increasing production efficiency

Boosting production efficiency is one of the most effective ways to control costs in the ceramic industry. This can be achieved by reducing waste, streamlining processes, and maximising output from available resources. Adopting lean manufacturing principles can eliminate waste across the cycle, reducing excess inventory, minimising overproduction, and improving workflow efficiency. Automation in areas like glazing, cutting, and sorting can reduce labour costs, improve precision, and reduce material waste. Standardising processes can minimise errors, improve product consistency and reduce the need for costly reworks.

Material sourcing

Effective material sourcing and inventory management are critical to controlling costs in the ceramic industry. Inconsistent material quality can cause production delays, leading to costly downtime or quality issues.

Relying on a single supplier can be risky, particularly during raw material shortages or price hikes. Diversifying suppliers ensures a steady flow of materials and reduces the risk of supply chain disruptions. Where possible, bulk purchasing contracts and rate agreements can help take advantage of economies of scale, reducing the per-unit cost of raw materials and transportation.

Supply chain coordination

Efficient supply chain coordination is crucial for cost control, ensuring that raw materials are available when needed and that finished products reach the market on time. Implementing integrated software solutions can provide real-time visibility into inventory levels, raw material requirements, and production schedules, aligning production with demand to avoid stock-outs or excess inventory.

The ceramic industry is yet to fully embrace real-time stock and sales integration at the retail level but once this happens, it will significantly improve efficiencies. Strong relationships with suppliers also enhance communication, helping manufacturers anticipate and mitigate potential disruptions, leading to better pricing, faster lead times, and priority access to high-quality materials.

Efficient product design

Streamlining product design is another powerful cost control strategy. Designing products that are not only visually appealing but also easier to manufacture can reduce production complexity and improve scalability. Modular designs using standardised components simplify production and allow for greater flexibility in meeting customer demands without the need for new production lines for each variant.

Focussing on designs that minimise material usage while maintaining strength and durability is another key cost-saving measure. For example, thin yet strong tile designs can reduce raw material costs without sacrificing quality. Regularly monitoring product performance and rationalising the portfolio by removing slow-moving SKUs can further help control costs.

Sustainability practices

Sustainability is not just an environmental and social imperative; it is also a cost-saving strategy. By adopting sustainable practices, ceramic manufacturers can reduce their environmental impact while cutting long-term costs. Investing in energy-efficient technologies such as solar power, LED lighting, and energy recovery systems for kilns can significantly lower energy consumption and costs.

Recycling unused materials or reusing waste by-products in the production process can reduce raw material costs. Implementing closed-loop systems allows for the efficient use of resources, and water recycling systems can help conserve and reuse water in the production cycle, further reducing costs.

Leveraging technology

Technological advancements have greatly benefited the ceramic industry, and further leveraging these technologies can help drive down costs. Robotics for tasks such as material handling, glazing, and tile sorting can increase production speeds, reduce errors, and lower labour costs. However, a cost-benefit analysis is crucial to determine whether automation or manual processes are more relevant in a given scenario.

Using data analytics to monitor production metrics, predict demand, and optimise machine performance can reduce downtime and improve efficiency. As 3D printing technology becomes more advanced, manufacturers can also create prototypes faster and more cost-effectively, reducing design and development expenses.

Cost control and effective coordination across all aspects of ceramic manufacturing requires a well-planned strategy. Efficient supply chain management, product design, sustainability practices and technology integration are key to controlling costs. Implementing these strategies will not only enhance profitability and streamline production but also improve environmental sustainability, offering a long-term competitive advantage.

About the author
Abhishek Somany, Managing Director and CEO, Somany Ceramics is leading the firm which is among the top 15 global giants of the ceramic industry. He also served as Chairman of the Indian Council of Ceramic Tiles and Sanitaryware (ICCTAS) for the 2021-22 term.