Business process optimization causes entrepreneurs the whole variety of feelings and emotions: from misunderstanding to complete negation of this process because it is always very difficult to correct your own mistakes and at least even admit them. But as soon as an entrepreneur sees that optimization helps to lower expenses and clear profit becomes bigger, he starts doing that all the time. Business process optimization can be directed to various spheres of business. But now we will talk about optimization of production expenses.
Optimization of production expenses
Costs of raw materials
If you are engaged in manufacturing but not in reselling you need to reconsider all your expenses on raw materials. What aspects of saving can occur? Sometimes costs on raw materials vary significantly. Study the quality of raw materials attentively: maybe, it is your production which doesn’t need raw materials of the highest quality. Maybe, it is quite enough for your production to buy raw materials of average quality.
Study all enterprises which offer your raw materials, contact them and get price lists. Then make a list of offers and compare prices and costs for delivery. If it is more profitable to deliver raw materials by means of transportation companies, it is better for you to use their services.
Subscribe to newsletters of transportation companies and specialized exchange markets which sell your kind of raw materials in the Internet. By means of these services you will be able to arrange a large delivery of raw materials which will cost less.
It is not a secret that large procurements are the most profitable. Discounts on wholesale purchases can vary from 15% up to 30%. This means that sometimes it is more profitable to take out a loan for a year and to make a wholesale purchase and to use cheap raw materials.
However, there is such a factor as product obsolescence. That is why it is important to assess the necessity of a large run. You should understand to what extent you should economize.
Having understood the principles of business process optimization you will keep on developing this direction of your activities. This will give you an opportunity to develop your own strategy of business process optimization in your own unique directions typical for your business. Find your own ways and methods of business process optimization in your enterprise. The more creative your decisions are, the more opportunities to enlarge your profits you have!