LED industry to reduce production costs there are 7 errors
Source: Date:2018-01-05

Cost reduction is the eternal theme of enterprise management, but the problem now is very important and urgent, especially for the LED display Chinese entered the era of meager profit enterprises, due to rapid growth of the new normal in the overall economic environment, labor, raw materials, energy and other factors of production increase is greater than the enterprise production efficiency improvement, LED the display business is more and more difficult, therefore, continue to explore the way to reduce cost is undoubtedly a controllable LED display corporate self-help. However, lower in cost management, the enterprise often exist, over reliance on financial care for this and lose that retroactive, and not to stick to the quality, ignore the interests, the pursuit of fashionable surface phenomenon, it will weaken the cost reduction effect, and reduce the cost into error. The benefit from management blindly understand cut costs and compression costs are likely to injure the enterprise. By a misunderstanding of the buyer's market dominant position, the cost of purchasing blindly to keep the prices down, resulting in the quality decline of raw materials in order to reduce the cost of raw materials, enterprises tend to be many suppliers together, raised the price at its request, if the supplier does not allow an enterprise request, immediately suspend cooperation. In fact, it is very easy to get into the misunderstandings of enterprises to reduce the cost of. In the face of this situation, many suppliers have to settle down, but they will be the next step is to put forward unreasonable demands, their upstream suppliers finally appeared overwhelming the whole industry chain price sound. In the whole value chain, each link between are interdependent, the next part of the cost management must be established on the basis of cost management on the part of the cost minimization of a link does not mean that the next part of the cost will be minimized, but do not mean that the entire value chain cost minimized. Some enterprises in one-sided pursuit of the procurement cost minimum, then the purchase of cheap raw material quality. If only the purchase link, do cost optimization, but because of the poor quality of raw materials resulting in production costs, increase the cost of the sales department, customer satisfaction will be reduced, a summary of these issues, you will find the entire value chain cost increases. What is more, because the purchase prices, raw materials may appear shoddy phenomenon, cause quality accident, resulting in damage to the brand company, is the so-called "The loss outweighs the gain., nothing wrong with selling, only buy the wrong." Will mistake two cost advantage is one-sided that simply reducing the production cost most managers will naturally understand the cost for the production cost, the cost reduction is limited to the production process, there was no gu. In fact, in the traditional manufacturing industry, the production cost is only a fraction of the total cost, about 50 - 70%, and a large part of the cost in technology research and development, marketing, customer service and other fields, and they are often at the cost of analysis has received little attention. Therefore, to reduce the production cost at the same time attention, to find ways to reduce the cost of the whole supply chain from the perspective of. Otherwise, the cost of production is too limited, not only has not demonstrated, sometimes things. Misunderstanding three will reduce the cost for each link of the whole supply chain cost was the lowest supply chain around the core enterprise, through the control of the information flow, logistics, capital flow, starting from the procurement of raw materials, intermediate products and final products are made, finally by the sales network products to consumers, some managers that enterprises should seek to minimize the cost of all aspects of expenditure. The supply chain is a system composed of a series of interdependent enterprise value activities, the link between the cost of mutual influence, sometimes even shift, therefore, should be coordinated and optimized between through the supply chain cost cuts the opportunity to pursue the total cost optimization. Misunderstanding four will reduce the cost for cutting mechanism, make snap reduce manpower, reduce welfare, and as a sign of reform bold Chinese enterprise management is usually relatively extensive, resource use efficiency is low, therefore, to strengthen the cost management for enterprise profit is vital to. However, the essence is to reduce the cost to improve the input-output currency rate, rather than blindly increasing the input-output coefficient, not blindly squeezing costs. But unfortunately, many enterprises cost management has entered a misunderstanding, especially in the management of labor cost, and want the horse to run fast and want to eat the horse, is it possible? The result can only be reverse elimination, bad money drives out good money, become a training base for peer talent. What is the appropriate cost a little economic sense people should know: pay a fee paid higher lower cost, pay the fee if not return, is a waste. In the cost, not wages from the enterprise pay cost to determine the level of the size, but the value of employees for the company to contribute to judge. Misunderstanding five neglected product development, technology research and design on product cost is an important factor for the product design often pay attention to the influence on market competition, consumer demand, production capacity and raw material costs, once finished setting, 60% of its cost will be locked, concrete operation only by improving efficiency and the ratio of input to output to reduce the cost, the effect is quite limited. Therefore, the enterprise should be developed as a supply chain cost to reduce the cost of the first part, from the raw materials can be obtained easily, the production process, the production efficiency of the stable and mature product distribution facilities and other aspects of comprehensive consideration of the design cost, fully take into account, make the enterprise cost leading strategy to win at the starting line. Dynamic, lack of comprehensive analysis from the perspective of the cost and planning enterprise in addition to cost behavior at some point analysis misunderstanding six, must also consider the cost of absolute value activity and relative cost varied. Some improvement measures at a point in time on the cost reduction effect is obvious, but with the passage of time, the effect showed a rapid decay phenomenon, such as some enterprises in order to increase production efficiency and make equipment exceeds the design speed, resulting in deterioration of equipment in advance until the end of life. The enterprise can through the dynamic cost analysis, forecast the change of value activity cost drivers may occur, and promptly take appropriate action to make themselves at a cost advantage. Ensure persistent cost advantage, to prevent competitors imitate the interaction depends on many factors to reduce the cost of products, scale, advantage system, proprietary technology cost more durable than other cost drivers. Achieved through interaction of multi value chain competitive advantage, can make competitors difficult to imitate, to enable enterprises to maintain lasting cost advantage, therefore, can not determine the effect to reduce the cost of the only one time node. Misunderstanding seven contradictory factors, reduce the cost of enterprise cross impact in reducing the cost, because of the lack of overall planning, pre planning, often result in conflicting ways to reduce the cost of different links. They are trying to increase market share and benefit from economies of scale, but the production of various specifications of the products, the result will increase the cost of management, reduce the scale effect. They will plant located near the local consumers to save transportation costs, but due to increased production costs due to yield dispersion. At the same time, because of the difference of product cost often affect its market competitiveness in different enterprises may, for certain products or customer price is too high, and given price subsidies for other products or customer price, cross subsidies inadvertently tend to make competitive advantage. Conclusion Chinese is a big manufacturing country, China is 80% of the global LED display products manufacturing country, either now or in the future, on the "cost reduction" topic naturally prolonged. But as the LED display manufacturing enterprises should follow a measure of cost advantage principle, that is to provide guarantee with rival products under the premise of equal value, reduce the enterprise cost relative to competitors, that is to cut the product or service does not increase the difference of the book. If you do not consider the product or service value and blindly reduce costs, may not make the cost advantage, sometimes even The loss outweighs the gain. counterproductive.

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 Archled Technology Co.,Limited, which is a professional Manufacturer and Exporter of  architectural lighting and controlling system. Archled take"zero defect products" as the goal, constantly improve and enhance the quality of products. We quest for innovation and pursue better user solutions and better user experience.

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