Cost Improvement-Product-A

Cost Improvement-Product-A

As the production engineering manager for tricycles aiming at removing 10% of the product without drastically reducing the product’s quality, I will consider several measures based on what was learned from the course. First, I will thoroughly analyze the costs incurred by the company in the production process. Essentially, this will ensure opportunities to save costs are identified in the current cost structure. The cost analysis will identify parts that contribute significantly to the production cost, and more effort will be directed toward cost savings. Second, I will consider streamlining the production processes. Notably, this is so because the more efficient the production processes are, the less cost that will be incurred in production (Chapman et al., 2017). More efficient production processes can be achieved by enhancing automation to eliminate steps that add less value.

Third, I will enhance the company’s inventory management practices. For Product A, I will install a just-in-time (JIT) inventory management system to ensure materials are held only when needed. Essentially, this is so because the product has reached the maturity stage, and holding more materials in inventory may be the factor behind higher production costs (Mtar & Smondel, 2019). Lastly, I will consider an engagement with employees and suppliers. On the part of employees, I will ask them to offer suggestions for reducing costs. Employees can significantly help because they understand production better due to first-hand experience in the production process. Suppliers can help me lower the production cost if I agree with them on new prices for production materials. Since the suppliers compete, I can likely secure a supplier with lower material prices for the same product.

Reference

Chapman, S. N., Arnold, J. T., Gatewood, A. K., & Clive, L. M. (2017). Introduction to materials management. Pearson Education Limited.

Mtar, K., & Smondel, A. (2019). JIT inventory control and manufacturing SME performance. Human Systems Management, 38(3), 243-255.

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All answers between 250-500 words + 1 citation

You are a low-cost manufacturer of tricycles, and you compete primarily on price. Your product (product-A) has been successful for a while and is entering into the “maturity” phase of its life.

As a production engineering manager, you are asked to remove 10% of the product cost without drastically lowering quality. Instead, you have been asked to look at all the areas covered in this lecture.

Explain in detail how you will go about ensuring you uncover all areas for cost improvement.