You may find it helpful to use a flow chart in describing your production process.<\/p>\n
Your costing must be right on before you can get a valid measure of your company’s profitability.\u00a0 Although some companies calculate their overall cost including their contribution to overheads, marginal production costs are far more important in defining profitability.<\/p>\n
Raw materials and components cost money, and, for many small businesses, they eat up a big portion of their working capital.\u00a0 A reduction in stock requirements, will therefore improve your company’s financial position.<\/p>\n
Many companies have adopted the Japanese just-in-time philosophy to manufacturing.\u00a0 Raw materials arrive only when and where they are needed in the production process, and not before.<\/p>\n
Don’t feel compelled to manufacture your entire product.\u00a0 It may be cheaper and more efficient for you to have someone else do it.\u00a0 Whether you make or buy parts will depend on things like your inventory financing, labor skills, and production costs.<\/p>\n
Avoid putting all your eggs in one basket by relying solely on one supplier.\u00a0 This makes you vulnerable to problems in quality control, price, and availability.\u00a0 Although there are definite advantages of convenience in dealing with one supplier, it may be that other firms can supply a better product at a more competitive price.\u00a0 Having three or four suppliers will guarantee you a constant supply of materials for your product.<\/p>\n
Keep in mind that longer production runs have a lower percentage of start-up costs.\u00a0 In some industries, records for example, set-up costs make up the biggest chunk of the final cost, with raw materials being relatively insignificant.\u00a0 Long production runs, however, produce large quantities of stock which locks in your cash.\u00a0 They also reduce the variable production cost of each item, as more experience is gained in the production process.\u00a0 This is known as the learning curve, and it partly accounts for the continued dominance of mass production companies.<\/p>\n
You may want to include a production plan in your proposal, showing cost-volume information at various sales levels of operation with breakdowns of applicable material, labor, purchased components and factory overhead.\u00a0 Discuss the inventory needed at various sales levels, and how any seasonal production loads will be handled without severe dislocation.<\/p>\n
Evaluate your machine and plant performance in relation to your competitors’.\u00a0 Old or outdated machinery can be a big drain on your workers’ time if they constantly need repairing, as well as lowering your company’s productive capacity.\u00a0 It makes sense for you to analyze the costs and benefits of replacing your current machinery.<\/p>\n
Most machinery you buy will have a fixed life span measured by the increasing likely repair costs and declining overall efficiency.\u00a0 Ask your supplier to mark out a replacement program based on the machines anticipated life span.<\/p>\n
Don’t underestimate the importance of quality control.\u00a0 Your company’s long-term success depends on it.\u00a0 Quality control measures in manufacturing include laid-down sampling and testing procedures against performance guidelines.\u00a0 These may expose quirks in your production process, which can help you cut down on your wastage.\u00a0 Quality control also helps reduce your level of working capital.\u00a0 Returned products mean less money flowing through your company.<\/p>\n
The footprint of the owner is the best manure.\u00a0 English proverb.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" You may find it helpful to use a flow chart in describing your production process. Your costing must be right on before you can get a valid measure of your company’s profitability.\u00a0 Although some companies calculate their overall cost including their contribution to overheads, marginal production costs are far more important in defining profitability. Raw […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":43,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-112","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/pages\/112","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/comments?post=112"}],"version-history":[{"count":1,"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/pages\/112\/revisions"}],"predecessor-version":[{"id":113,"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/pages\/112\/revisions\/113"}],"wp:attachment":[{"href":"https:\/\/entre-plan.com\/index.php\/wp-json\/wp\/v2\/media?parent=112"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}