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Abrasives Purchasers: Reducing Costs & Improving Efficiency

It has become a prevailing trend for transformation of China's economic development mode. A large number of abrasives manufacturers are faced with equipment upgrading for environmental protection, increasing labor costs, etc.

From: iAbrasive.comDate: 2014-10-16 03:15:08Views: 588

It has become a prevailing trend for transformation of China's economic development mode. A large number of abrasives manufacturers are faced with the situations of equipment upgrading for environmental protection, increasing labor costs, low competitive price, etc. Take metal cutting tools for example, which serve as important consuming tools in machining and manufacturing industry. The total income of the well known FAW (First Auto Work) last year reached ¥460,000,000,000, among which the expenditure on metal cutting tools was around ¥4,000,000,000 to ¥18,000,000,000. The substantial consumption has made the choice of manufacturing tools a focus for abrasives companies to reduce costs and improve efficiency, which has been on agenda recently.

The process of a company's operation is composed of three stages: supply, produce, and sell. The three stages are dependant on one another and are inter-constraint. The successive alternating and circulating of the three stages have formed the whole process, during which the profit a company gains depends mainly on two basic parts: one is good-quality and inexpensive raw materials; the other is strict control over production.

Take the grinding wheel for example. As is known that the material quality, grit size, specification, and shapes of grinding wheel vary. The traditional cost control method usually focuses on rate of expenditure and material procurement price. While market change has made material procurement price changeable and difficult to control. As abrasives dealers, one is suggested to better cost management and control in the following aspects:

1. Attach importance to goods purchasing price market surveys and market forecasts. Grasp price changing trend and strive for buying in products at a lower price. Meanwhile, pay more attention to cost performance to prevent being caught in the traps of low price with poor quality;

2. Pay attention to capital utilizing efficiency. If your products are not held up, the profit is more. Information-based means such as ERP should be adopted to collect feedback information and settle accounts. Control all types of stocks reasonably and improve capital velocity;

3. While reducing consumption, one should also control and cut down non-productive expenditures. Special attention should be paid to calling upon employees to save energy and reduce consumption. Neither prolonging working time nor increasing labor intensity to maintain price competition is advocated.

Besides, abrasives purchasers can also guarantee profit margins in competitive methods. Grinding wheel is a kind of consumable. Its production features is various types in small amounts. Currently, most grinding wheel companies' layout is integrated. Faced with customers of the same kind, grinding wheel companies target at grasping the market and price competition. However, there are few companies conduct market segment. Perhaps a certain kind of product is peculiar to a customer or certain kind of grinding objects. Therefore, one can try promote a product to different customers, rather than simply try closing a deal with a single abrasives customers.

Author: Liwei Chu 
Copyright: iAbrasive.com--Abrasives & Diamond Tools Market

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