The manufacturing sector in Germany is under great pressure to lower costs in order to stand up to international competition. Surprisingly; the biggest cost-factor – the cost of materials – is only rarely in the spotlight when it comes to exploiting potential for savings.

Verteilung der Kosten im Verarbeitenden Gewerbe
Distribution of costs in manufacturing

According to the Federal Statistical Office (04.03.2010), the percentage of costs for materials in the engineering sector is around 43,8% of the total sum. The remaining costs are; personnel costs at 27.7% and the energy costs 0.8%. This leads to the question: Do we have potential to reduce the material cost without sacrificing the quality? Comparing the amount of material in the produced goods to the amount of material used for their production is a first step in finding the answer. This ratio is called material efficiency. A higher material efficiency can be achieved by reducing the use of materials, for example, by reducing the waste, the use of adjuvants or by optimizing product design. The use of alternative materials concerning the product as well as the production itself can improve the efficiency. Thus, it is a common approach to use the known materials instead of checking if there are other, better options to develop new products. The same issue occurs in the production-process where materials are used that tend to wear out easier than their possible alternatives; improving the wearout-resistance would lead to a rising efficiency.

To increase the material efficiency, there are three basic ways:

  • Materials contained in the product: Here it is possible to check if the chosen materials are adequate as well as if the used amount is necessary, furthermore it is to be tested if the waste can be reduced. Of course there are much more possibilities concerning this way.
  • Materials that are required to produce the product: These include all materials which are used to bring the material into the desired shape. Examples of these may be tools or forms.
  • Materials and supplies and packaging materials.

Usually there is a correlation between the reduction of material costs and a reduction of further costs such as energy and disposal costs.

The potential savings are often much larger than initially assumed. Regarding the rising raw-material prices and the shrinking resources it is obvious that the material-efficiency has to be taken more serious.

The value of Materials that are annually processed in Germany is around 500 billion €. While the labor productivity had increased by a factor of 3.5 since 1960, the development of material productivity lagged (factor 2). Studies have shown that a increase in material efficiency around 20-30% could be achieved until 2016. The increase in material efficiency by 20% would have a huge business and economic relevance with a potential savings amount of € 100 billion. The average savings-potential per company and is around € 220,000. Directly spoken the savings-potential could be around 2,5 of the total turnover. This sounds slight, but considering that these savings are affecting the company’s profit directly, it is to be recognized that the effect could be much bigger.


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