Permit me to quickly shoot a blog on the subject of materials today. This is for entrepreneurs who are involved in some form of manufacturing, processing, conversion and similar approaches in their businesses. It has been a long time since I last wrote an article about manufacturing, but if you are curious you could read my blog entitled What an entrepreneur must know about manufacturing. Related articles that might interest you also include Top Issues an Entrepreneur Must Know about Productivity – Part 1, and Top Issues an Entrepreneur Must Know about Productivity – Part 2. These articles have something to do with materials and other productive resources, production, productivity, impact of productivity on profitability and a couple of other issues. Don’t you think these might be useful to you?
Now, by materials I mean physical things or substances whether in purely raw or natural form, modified or semi processed or fully processed that are used in the process of manufacture or production as inputs, to enable the business come up with a finished product. Some people refer to materials as feedstock or commodities. Direct materials form part of the final product but indirect ones do not form part of the final products or goods. Materials are an important part of what economists call the real sector, which refers to that part of the economy concerned with actual production of goods and services rather than buying and selling. If you want to learn more about the real sector, simply talk to a good economist. Don’t ask me the criteria to use to determine a good economist. Ok?
The problem that exists in some enterprises, small and big, is that some entrepreneurs including their managers hardly have any clue about containing raw materials costs. This makes their businesses bleed money so badly, and sometimes even cease operations or hardly make good return on investments (ROI). They could be yapping about high operating costs endlessly while their competitors in the same industry are controlling their costs and laughing (not just smiling) to the bank with their profits. You need to smell the coffee my dear entrepreneur. This is why today I thought we should talk about tips to reduce material costs in an effort to save some money for the business. Remember this, you are the one going to keep that money you save and I’m not coming to ask for it so you better take this seriously if you are an entrepreneur who uses materials in your business. Do you understand me?
What are the tips then?
So, let me now make a swift ending here. The above are some tips to help reduce material costs in your business. If material cost forms a significant portion of your business costs, you better seriously take note of the above options and determine which ones you can implement. If you chose to struggle amidst plenty of knowledge, that is up to you!
Enjoy the new week,
The Wise Entrepreneur