Auto & Motor

Insight on how to achieve Low Production Costs in the Manufacturing Processes

In this current times, consumers are used to value addition on products and the clock cannot be turned back. This entails altering raw supplied to a better and more valuable finish good. One of the values added to raw material is the aspect of durability. Finished goods change the lives and lifestyles of their users, increase functionality and are sometimes market disruptors. Manufacturing involves handmade crafts or machine based processes. A case in point are the canned foods, refreshment drinks, furniture, cloth wear, automobiles and even aircrafts. Manufacturing businesses are propelled forward by managing overheads in order to increase profitability.

The first step to achieving lower overheads and higher profitability is by assessing efficiency in the manufacturing processes. A firm can increase its productivity by embracing advanced technology in their manufacturing process. This can be achieved faster by embracing computerized machinery. Nonetheless, production process changes should not compromised the quality of the product brand. Greater productivity can also be achieved by acquiring a new operation system such as the end-to-end manufacturing solution. A functional application system eases the burden of inter-department coordination. A good system will also eliminate wastage, and overstocking due to increased functionality and coordination within sectors. Instead, the excess production is quickly translated to profitable sales.

Product cost can equally be lowered by evaluating the direct manufacturing costs. Some of which are labor costs, machine operation cost, electricity costs, and machine idle time. Improvements can be effected by buying cheaper yet quality material. The management and purchasing department should evaluate their suppliers to ascertain that they are providing them with quality materials at a cost effective rate. The management can also reach a decision to buy a totally different raw material brand that is equally as good as the counterpart. The firm can eliminate wastage, redundancy, machine downtime and high labor cost by investing in modern computerized machines. Processes that formally relied on costly human labor can be improved by investing in more efficient advanced machines.

Another area that really depletes profits is the product packaging. Some manufacturers lay great emphasis on the product packaging as opposed to the product itself. Once the product has gained popularity and has a strong market share, the management should re-consider using costly packaging material and settle for more affordable ones. The cost-saving on packaging can then be enjoyed as profits and passed on to consumers in the form of discounted prices.

Lastly, product manufacturing cost can be reduced through reduced labor costs. It is true that labor is a growth propeller. Notwithstanding, there should be some moderation. Manufacturing labor should be quantifiable through efficiency and productivity. One way is to put proper systems in place. High performers should be rewarded to allow for better productivity.

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