Cost cutting is the major way that companies and businesses can increase income and maximize profit. Production is one of the major sources of intensive cost for businesses. Therefore, seeking effective ways to cut back costs emanating from production can help reduce overall business expenses. Don’t forget that outsourcing solution will help you cut cost, including production cost.
Step #1: Keep Track of Your Inventory Closely
While it may appear to be a smart thing when you keep excess inventory, it is not actually smart in reality. This is because the act can tie your cash flow, resulting in additional storage cost. Therefore, you should track your inventory on a regular basis. This will ensure that your orders reflect only what you need per time.
Here’s an instance; you may deem it fit to purchase one year worth of product packaging materials. But, have you considered the fact that new regulations may necessitate using a different inscription on your product label? If this happens, you will end up wasting resources since you can no longer use those production materials.
Step #2: Write Off or Sell off Inventory
Write off or sell off inventory or a line of product that only sold little, or products left over after promotion. So, instead of occupying storage space unnecessarily, you’re better off selling off or writing off such left over on your taxes.
On the long run, embarking on this step will help you minimize production cost. So, don’t keep anything that will constitute waste or lead to increased production cost.
Step #3: Consider Outsourcing Production Offshore
Offshore outsourcing has been effective in reducing production costs. So, sit back and compute what you’re spending on manufacturing in your country, and compare it with offshore manufacturing cost. If you find offshore option more favorable in terms of cost saving, don’t delay in outsourcing production or at least part of your production offshore.
Step #4: Get Multiple Bids Prior to Purchase
Don’t always be in a hurry to purchase production materials. Employ due diligence in comparing price quotes from up to five different sellers before making your final purchase decision. Don’t forget to get as much details as you can as you compare each quote. Look at all cost-cutting features in each quote – including free shipping, discount for extended purchase contract and so on.
Step #5: Engage your Unused Production Space Gainfully
Instead of allowing your unused production space to lie in waste, consider leasing it. Take advantage of co-working spaces that have become popular in recent time. So, don’t just keep unused space, lease it out and recoup some costs from the income.
Go ahead and take advantage of these five steps for cutting back on production costs.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.
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Danna Andrus says: 
5 Major Steps to Cutting Production Costs
Cost cutting is the major way that companies and businesses can increase income and maximize profit. Production is one of the major sources of intensive cost for businesses. Therefore, seeking effective ways to cut back costs emanating from production can help reduce overall business expenses. Don’t forget that outsourcing solution will help you cut cost, including production cost.
Step #1: Keep Track of Your Inventory Closely
While it may appear to be a smart thing when you keep excess inventory, it is not actually smart in reality. This is because the act can tie your cash flow, resulting in additional storage cost. Therefore, you should track your inventory on a regular basis. This will ensure that your orders reflect only what you need per time.
Here’s an instance; you may deem it fit to purchase one year worth of product packaging materials. But, have you considered the fact that new regulations may necessitate using a different inscription on your product label? If this happens, you will end up wasting resources since you can no longer use those production materials.
Step #2: Write Off or Sell off Inventory
Write off or sell off inventory or a line of product that only sold little, or products left over after promotion. So, instead of occupying storage space unnecessarily, you’re better off selling off or writing off such left over on your taxes.
On the long run, embarking on this step will help you minimize production cost. So, don’t keep anything that will constitute waste or lead to increased production cost.
Step #3: Consider Outsourcing Production Offshore
Offshore outsourcing has been effective in reducing production costs. So, sit back and compute what you’re spending on manufacturing in your country, and compare it with offshore manufacturing cost. If you find offshore option more favorable in terms of cost saving, don’t delay in outsourcing production or at least part of your production offshore.
Step #4: Get Multiple Bids Prior to Purchase
Don’t always be in a hurry to purchase production materials. Employ due diligence in comparing price quotes from up to five different sellers before making your final purchase decision. Don’t forget to get as much details as you can as you compare each quote. Look at all cost-cutting features in each quote – including free shipping, discount for extended purchase contract and so on.
Step #5: Engage your Unused Production Space Gainfully
Instead of allowing your unused production space to lie in waste, consider leasing it. Take advantage of co-working spaces that have become popular in recent time. So, don’t just keep unused space, lease it out and recoup some costs from the income.
Go ahead and take advantage of these five steps for cutting back on production costs.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.
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