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.
Falcon’s Reliable Stock™ lean VMI program delivers 100% production uptime efficiency and reduces your lead times, while lowering your overall inventory investment in class C production components and fastening supplies. Talk to us today and find out how you could be saving time and money.
Michelle is the Marketing Manager at Falcon Fastening Solutions, Inc. She is focused in communicating value to Falcon's customers, contacts and audiences by sharing the company's unique approach to fastening and class C production component supply.
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SCMEP and Falcon Fastening Solutions are partnering to bring you Value Engineering Fundamentals. A 50% discount is offered to qualified attendees. SC manufacturers please call 864-288-5687 to find out if you qualify. If you are located outside of SC, please call 1-800-438-0332. Related Posts:10 Signs of a Good VMI Program March 31, 2014 How to Calculate Overall Equipment Effectiveness (OEE) March 4, 2015 How Vendor Consolidation Can Improve Inventory Management April 30, 2015 Read more →