Cost optimization should not be confused with reduction of manufacturing resources. It is crucial for companies who want complete transformational change to have in-depth knowledge of product costing and profit margins driving forces in order to monitor and evaluate improvement of manufacturing resources utilization or for business restructuring. Sustainable cost optimization relates to enhancement of manufacturing resources utilization known as the 4Ms (manpower, materials, machinery and methods). By doing more with less, the organization increases and sustains overall profitability.
Just as any other manufacturing industry in the world today, the manufacturing industry suffers from many problems affecting its overall financial performance. True manufacturing costs in the manufacturing industry are extremely difficult to measure and control. That’s the primary reason why all the focus goes to the direct labor where it is easy to count items produced rather than consider all the key performance drivers of unit costing. Also, manufacturing performance cannot simply focus on traditional KPIs such as worker output, product throughput time and level of quality. Senior management is often still confused about just how costs and services should be planned, managed and improved in order to attain profitability and keep customers happy and satisfied.
The traditional unit costing formula to establish the unit selling price is the unit manufacturing cost (labor cost and BOM) plus unit profit. Using this approach, the unit selling price is defined by the projected unit manufacturing cost plus the target unit profit. Since the unit selling price and unit profit are invariable, the factory's only remaining variable is unit manufacturing cost which is limited.
Senior Leaders must be able to set direction and show leadership, delivering cost optimisation as a strategic, business transformation programme. A profit-oriented world-class company's primary mission is to realize annual net targeted profits and to provide competitive and affordable unit prices. Senior management must first create a budget for initial stage planning costing. Then ways must be devised to keep costs down with a target costing system initiated at each new product development stage. Later, at the manufacturing stage, factories will carry out a series of additional and continuous cost-saving improvements in a system known as allowable costing.
This course is suited for CEOs or senior executives who have the interest to lead their organization to safe haven while engaging the entire workforce in the process of cost optimization. This course is unique of its kid and has never been offered in the manufacturing industry. It's a MUST for every leader. Without this course, there would be no sustainibility or improvement.
