Research and development planning plays a key role in the continued progress of the steel industry through the discovery of more efficient and effective production processes and the creation of high-quality, value-added steel products.
The development of better monitoring and control systems, advanced steel rolling processes, new casting techniques, and more have helped to reduce manufacturing and energy costs, improve process yields and productivity, expand profit margins, and drive the overall growth of the industry.
Although these advancements are a result of dedicated research and development efforts, it is difficult for companies to prove the correlation between R&D expenditure and their profitability. Historically, R&D is a field fraught with substantial risks and companies that do not have the requisite skills, technical know-how, and financial astuteness to handle said risks usually end up flushing their hard-earned revenue down the drain.
Essentially, the cost of R&D can be quite high and there is little to no assurance that these efforts would eventually pay off. Here are four ways that quality research and development planning can help manufacturers reduce the cost and time of R&D efforts.
1. Exploitative Research and Development
Although most companies tend to innovate using exploratory R&D, it is a potentially costly and largely unsuccessful approach that requires researchers to come up with a never-ending stream of ideas that could (potentially) become the next big thing. Companies end up using their entire research and development planning budget in a continuous search for the next ground-breaking idea. However, there is a far better approach.
Exploitative R&D requires enterprises to make use of the ideas they’ve already discovered. By focusing on these ideas and exploiting them from every possible angle, there is a much better chance that R&D efforts will yield positive results. Since exploitative R&D costs less than exploratory, companies can stretch their budgets—enabling them to get improved returns on their R&D expenditure.
2. Need-Seeking Innovation
The current global economy is characterized by growing competition. This is a situation that prompts enterprises to look for ways to cut down on operating costs and deliver better products and differentiated services to customers. However, even market leaders struggle to achieve their projected growth rates through innovation. Companies that are experiencing declining sales and leaner profit margins should cut their spending on breakthrough innovation and allocate more of their dwindling R&D budgets on need-seeking innovation. By focusing on incremental innovation and devoting resources to understand current consumer and market needs, companies will be able to develop new products and technologies that their customers will want to use immediately, having an immediate impact on their financial standing.
3. Developing New Technology and Better Processes
It’s obvious that companies with strong manufacturing technology and improved process development have a competitive advantage over their rivals. They can deliver differentiated, higher quality products to customers, ensuring increased profitability and total domination of the higher-value segments of the steel market. By focusing research and development planning on new technologies and better processes, companies can cut operating costs, lower their future capital requirements, and increase profit margins, enabling them to allocate additional resources to research on even more advanced tech.
4. Focusing R&D Efforts on Plant Waste
Steel is the largest metal category in the industrial and municipal solid waste streams. The solid waste generated by steel plants are the products of the various processing steps required in the production of iron and steel. Although the waste products of steel plants were previously regarded as items to be discarded, recent research has proven that these by-products can be converted into useful materials. Through extensive research and development, steel companies can lower costs by discovering new ways of using solid plant waste as productive inputs.
Research and Development Planning to Reduce Cost and Time
Steve Jobs once said that innovation had nothing to do with how many research and development dollars you have. This is especially true for the steel manufacturing industry. Although companies usually reinvest a significant part of their profits into R&D, they should do so judiciously. By leveraging the right approach and focusing R&D efforts on more feasible solutions, companies can cut their R&D expenditure while retaining their ability to successfully innovate.
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