کاهش هزینه تولید در مدیریت مهندسی
-
-
How to reduce production costs in manufacturing businesses.
- Before discussing ways to reduce production costs, let us first understand the concept of production and the different elements of production cost.
A manufacturing concern is a business enterprise engaged in the production of tangible items called goods or commodities. - Essay producing basically requires combining some resources to create a new essay. The article that appeared has a distinctive name and has unique features and uses compared to its components.
- What is the cost of production and what are its different components?
- The cost of production is the cost of preparing raw materials and converting these raw materials into finished products. In other words, all costs related to the factory are included in the cost of production.
- Manufacturing Cost = Direct Material Cost + Direct Labor Cost + Factory/Manufacturing Overhead
- Direct material cost
- Direct material cost is the cost incurred for the procurement of raw materials. This includes the cost of purchasing the materials and the costs incurred to bring the materials from the supplier’s location to your factory location. Purchase tax paid, which is a creditable element of input tax, is not included in the direct cost of materials.
- Examples of costs including direct material costs:
- The cost of buying
- carry in
- Loading and unloading costs
- Carrying cargo
- Note: consumables such as packaging are not included in the direct cost of materials. They are instead subject to manufacturing overhead costs
- Direct labor cost
- Direct labor cost is the cost of labor that is done to convert raw materials into finished product.
- Example of labor cost:
- Wages of frontline workers
- Manufacturing/production overheads
- Manufacturing overheads are costs incurred in the factory excluding direct materials and direct labor costs. Such overhead costs cannot be easily assigned directly to a product. That is why they are also known as indirect costs of production.
- Examples of manufacturing overhead:
- Factory rental and insurance
- Electricity and other expenses required to run the factory
- Lubricants and consumable stores such as packaging materials
- Cotton waste, small tools and grease
- Salaries of factory supervisors
- Salaries of goalkeepers and sweepers
- Depreciation of machinery
- Car maintenance
- Sales and administrative costs (outside the factory) are not included in production costs. They are included as indirect costs in the profit and loss statement.
- Ways to reduce production costs in a manufacturing business
- Business as an economic activity seeks maximum profit.
- There are mainly two ways to increase profits. 1. By increasing the selling price per unit and 2. By reducing costs. The first one seems dangerous and unwise in today’s competitive market.
- Therefore, most businesses choose the latter. In a manufacturing concern, the total costs can be checked with the minimum cost of production.
- Below are some ways to reduce production cost
- ۱. Track the numbers
- First, you need to keep track of your main expenses. If you don’t, start now.
- You cannot reduce anything that has not yet been recorded. It is reasonable?
- No, you don’t need an accountant to do this. With the advent of technologies such as cloud accounting software (example: Quickbooks), even a non-accountant can track and monitor numbers.
- Start by tracking at least the following key numbers:
- production capacity
- Actual used capacity
- Direct material cost
- Direct labor cost
- Production overhead
- work efficiency
- Carrying cost of inventory
- Cost of goods sold
- extra expenses
- Inventory in & out
- Cash in and out
- If you don’t want to use accounting software, try recording the numbers in a simple Excel file. The point is: whatever you do, please keep track of your numbers.
- If you have a large team, share the templates with them (or create them in the user’s accounting software) and instruct them to start the numbers. do it now
- It’s hard to believe, but it’s true – even a simple record of numbers will give you a lot of ideas
- ۲. Reducing the cost of direct materials
- The cost of direct materials constitutes a significant part of the total production costs.
- There are a number of techniques for controlling direct material costs. Let me share a few:
- Invite quotes from as many suppliers as possible
- Consider signing a long-term contract with a short-listed supplier. This gives little assurance to the supplier, who in turn can lower the price accordingly.
- Offer cash payment in exchange for cash discount. Most suppliers will be willing to trade a discount for prompt payment.
- At the end of the financial year, claim the turnover discount. Suppliers are willing to give discounts to customers who have contributed to their turnover or revenue.
- Negotiate like a pro
- Consider international sourcing from Chinese B2B wholesale websites such as Alibaba, Global Sources, Dhgate, etc. Of course, international sourcing comes with a few additional costs such as import duties, container shipping, etc. So, do a cost-benefit analysis before making a purchase. from international suppliers
- Consider restructuring your product. Is it possible to replace a particular raw material with a substitute without compromising quality? Example: A furniture manufacturer can replace cheap raw wood with cheaper alternatives such as plywood
- Create a database of suppliers with details such as name, phone number, email, address. This acts as a backup in case of adverse market situation such as price increase, lack of supply or economic recession.
- Connect with a shipping company that will help you bring the items from the supplier’s location to your factory. Invite quotes and enter into a long-term contract with a short-term carrier. It may even be a verbal conflict
- Ask the shipping company to take care of unloading raw materials at your factory. Mention the same in the contract. This will save you a lot of money. (Pro tip: Local unbranded shipping companies offer great shipping rates. Avoid using DHL or FedEx branded shipping services)
- Direct materials are the most important part of production cost. If you can effectively reduce the same amount, you are half done
- Reduction of direct labor costs
- Review employee wages and hours…
- Avoid over-scheduling staff…
- Optimize processes with the right tools…
- Negotiating with suppliers
- Buy materials only when you need them…
- Replace expensive materials with affordable materials.
- Review and redesign products or processes…
- Review the rental
- Some strategies for selling during a recession
- Don’t devalue your product During the recession of 1973, at the same time as the panic of competitors, IBM
- He did an unusual thing: he raised prices.
- Keep calm and focus on solutions. …
- Focus on fewer customers, but contact them more often. …
- Upgrade your sales force, don’t ignore your base…
- Upgrade your sales force
۱۲ comments