Lowering cost is always at the top of every production department’s list, but many manufacturers just shop for the lowest price and completely miss the bigger cost-saving opportunity. By examining the total cost of ownership, or TCO, you can identify the places your money is going, from the obvious costs to those less apparent.
The TCO will, of course, include the price on the invoice, but this visible cost is only about fifteen percent of the total, much like the tip of an iceberg. The other eighty-five percent, hidden below the surface, is wrapped up in labor, transportation, holdings, safety stock and errors.
Over the course of this series, we will dissect each segment of both visible and hidden costs to expose all the variables you can consider to reduce expenditures.
Come back to Falcon Fastening soon to find out more about inefficiency number one – labor costs, which are draining your productivity and your bottom line.
Thanks for watching!