Business Ideas What Are Some Great Ideas To Reduce Production Cost?

[Good-Guy]

Production cost is the total price of manufacturing any kind of goods. Whenever you manufacture an item, you tend to look at various factors. Whatever products you look in the market were manufactured. They did not come into existence automatically. For example, if you buy a chocolate bar from the market, you must realized that it was manufactured by the company and company invested a good amount of money to make that single chocolate bar. One of the main aspects of manufacturing products is purchasing raw materials. In case of chocolate manufacturing, it takes capital to buy cocoa, sugar, preservatives, chemicals, etc to manufacture a single bar of chocolate.

Moreover, the manufacturing company also needs to separately buy more materials to produce the wrappers of chocolates. So sometimes the production cost of certain products could be higher and I think this is why many things are so expensive in market. These products are probably bought by wholesalers or middlemen and then they are delivered to retailers who buy them at wholesale price and sell those items at retail price to people. So, what steps do you think could be taken to reduce the production cost of many goods that are being manufactured by different companies?

 

[Alexandoy]

In our production management subject in college, one of the essay question in our midterm exam is the title of this topic. This is not to brag but I got a perfect score with my answer although it is a lengthy one. To summarize it here the first step is to check on the overhead expenses that would include overtime work and hiring emergency workers. Take note that emergency workers are paid double of the compensation of regular workers. When several regular workers get sick then the factory has to hire emergency workers so the production will not be affected. The gist of the cost reduction is mainly in the operation particularly the wages of the workers. You pay more during a holiday and Sunday. That means if the factory is closed during those days then you have saved a lot. You also avoid overtime work if your labor force is in the optimum level. When the operation is short of workers then that is more expensive.

Of course the cost of the raw materials is also included in the study. But it's another long topic to discuss.