| Topic : Cost cutting for manufacturing companies |
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Manufacturing & Engineering Professionals
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Activity:
15 views;
last activity : 05 18 2012 10:03:56 +0000
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Reduce Inventory
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Stop the production of slow moving products and concentrate on value added products
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Raw material procurement
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Inventory plays a very vital role in any cost reduction process and this even includes planning inputs to output deliveries.Inventory management is not a easy thing to handle as it requires very precision planning in every stage of supply chain but,this will be a need of a hour in cost reduction. |
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Adding to what Jairaj has mentioned, visibility of the entire supply chain is extremely important. Looking into the Wall Mart case study, where they have a real time visibility of their inventory which has helped them being more predictive on demand.
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Because of international competition and global economic recession, it is better to stop the production of low value and slow moving products from your product mix. Producing this products will increase the inventory cost and causing various financial problems to the industries. So the management should advice the sales and production department to analyse the current market senerio and do accordingly. Producing value added and fast moving products increase the cash inflow to the company.
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The companies which have greater geographical presence or are multinational can achieve better price by buying bigger volumes instead of buying for individual units. Central buying policies are recommended for such unit. Bulk buying results in annual contracts for a period of twelve months for entire year requirement with prices being finalized for the entire period. Most of the commodities and raw material has seasonal cycle of prices as they peak and fall in intervals. Hence we can book maximum amount of our requirement when prices are low. |
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Dear Venkat, please explain properly like, what is it that you are trying to ask here, there is no description of the topic and just 2 sides which is making difficult to answer or support for that matter. |
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