Steps to cut raw costs

19 June 2012
Bill Brown, marketing lead, ProcurexThere are several ways a manufacturing company can reduce the cost of raw materials. The first way is to buy cheaper materials. Many companies feel they have to use the most expensive materials to produce the best quality products. This is not always the case, as technology enables a variety of ways to make good quality products. Therefore, seeking alternative vendors can be one of the best ways for an organisation to save money. The second way is to reduce the amount of waste from your materials. When starting out, many companies want to start making something really cool, but this might not be the most practical thing for it to do. It needs to concentrate at the start on creating a product that people are actually going to want to buy and let the production division worry about the amount of raw materials that are going to be used. Modifying the design of a product is going to help reduce the amount of waste. The third way is to get rid of some of the product’s features that are not actually needed. This means if you have a unique product, you need to examine it very closely to decide whether or not it actually needs those extra features. The best way to do this is to create a survey about it and ask people what they think about the extra features. The fourth way is to learn to negotiate. A lot of suppliers are going to be willing to negotiate the price of their goods if it means that they are going to have the company as a customer for a long period of time. This is especially true if the company can only use one type of vendor for their raw materials. If a supplier feels an organisation is going to be a really good customer, then they are probably going to come down on the price of their raw materials. ☛ Bill Brown is marketing lead at Procurex
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