3 Distribution Chains to be Maximized to Reduce Production Cost

Most of the companies, whether it is a large or a small company, which engaged in processing industry certainly processes raw materials and other supporting materials. This activity aims to make a product using raw materials, labor, and other machinery and equipment.

Each stage of the production process is costly, some of them cannot be avoided by companies, such as raw materials, labor, and other production costs. It is also common that a company often struggle over-budget than previously budgeted.

Whilst it is no secret that production and logistics costs continue to increase from year to year. The high cost of this process obviously has an impact on increasing product selling prices. Unfortunately, consumers want a stable price.

To resolve this, the company actually can reduce production costs because there is not infrequent waste in various fields, such as waste of raw materials, waste of use of machinery and equipment, expenditure of capital and work time, etc.

This step is known as optimize supply chain or optimizing the distribution chain. This chain is actually a coordinating system consisting of various things, starting from human resources, activities, information, and other resources related to the process of products or services.

The main purpose of optimizing this distribution chain is to meet consumer demand through the efficiency of existing resources so that production costs can be reduced. At the moment, how do you reduce production costs just by maximizing the existing distribution chain?

Minimizing the Use of Raw Materials

In the production of products or services, raw materials play an important role and become one of the most budget users. Actually, by minimizing the use of raw materials, production costs can also be supported.

Minimizing raw materials does not mean using valuable raw materials because this reduces the quality of the product. Buy good quality raw materials by looking for distributors whose prices are slightly cheaper but still of high quality.

Pressing Labor Costs

In general, there are two causes of rising labor costs, namely the placement of machines and production equipment that are not in accordance with non-conducive working conditions so that workers are not comfortable at work.

To reduce the cost of labor does not mean that the company cut down the number of available staff. There is something you can do if you make improvements to the placement of machines and equipment to work effectively.

In addition, it is important to create a more comfortable and productive workflow management, because all these things will have an impact on costs as there is a waste of time at work.

Saving on Transportation Costs

Finally, transportation costs like shipping materials to factories or distributing products to consumers. This transportation process is unexpectedly also spending a lot of the company's budget. Therefore, it is better to evaluate the use of the transportation system.

Some indicators include how effective the shipping process is using the current transportation modes and whether the company has got the best prices from existing transportation vendors.

That is all some part of the distribution chain of a company that can be suppressed so the production costs could become more efficient. Another way to reduce this cost is to utilize a third party logistic in the Karawang warehouse precisely in Karawang New Industry City (KNIC).

This is due to the concept offered by KNIC in which a world-class integrated industrial city is able to present a classy infrastructure to maintain budget efficiency of a company.


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