The Factors Influencing Cost Performance And Product Quality
Packaging, unitisation and cost performance
A good package design could hugely influence customers intention to purchase. Ti is because they will concern the shape, colour and logo. Repeat purchase will be happened when their product get appreciated by the others. People will have more intention to use a product with a good packaging design. Nowadays, as the customers have more well-educated, they will have more information to support their buying decisions. A more eye-tracking design may enhance customers reactions on the product. Godiva Chocolatier had create a new brand signature which called The G Cubes collection.
The packaging of this new products give chocolate lovers a new feeling especially those youngsters as its design is totally different from those traditional one. Each single taste of chocolate such as White Chocolate Coffee has its own packaging design. However, the design tend to be a modern and young direction with colourful packaging. So, it may attract a new generation of customers to buy their products. The size of packaging may affect the buying decision between parents and their children. Most of the parents suggest that larger items have more worth to buy while some children prefer smaller one as they think it contains tasty food inside. For example, a bulk box of LEGO vs a small box of GUNDUM.
How geography of manufacturing facilities influence the cost control of company? Many companies seek for cheaper labor to reduce cost. It is stated that foreign companies would like to set up their manufacturing facilities in special economic zones (SEZs) especially in China. It is because the cost of labor is low. Also, they have the right to employ and fire labor. SEZs usually are well-developed location with convenient access to a container port. In this case, raw materials could easily be brought in for handling and shipped to other countries. More than that, SEZs provided a cheaper corporate income tax rates. No extra charges for imported materials as well as re-exports.
It is reported that manufacturing an iPhone in USA would cost about $65 US dollars more than in China. Besides, the production speed in China is more rapid as many workers willing to live on-site and may work over-night. So, the workforce of China is better than USA and many other countries. In conclusion, a lower the production cost can boost a company’s revenue. In some research, cheaper labor cost is not a critical factor to locate manufacturing factories. It is becasue some similar countries like China, they may have a poor delivery performance and quality outcome. In this case, some companies might have to hire extra professional staff to double check the products before delivering out. This, extra cost may exist.
Storage area and quality of product
Many products need to be stored in a proper storage, such as raw materials and food. Cowpea is one of the main items in vegetables. It needs a good maintenance in storage area with suitable temperature and suitable humidity. The fact is any way of storage that is used to prevent existing bad conditions for their growth and thus it will improve the quality of seed. It is claimed that the quality of storage involve different temperature conditions to keep fishes in ice during refrigerated storage can extend its shelf life. Afterwards, fishes will be divided into different groups to store in the refrigerator with a individual thermometer. Peach fruits have a short post harvest life. Under a high temperature, the life will even shorter. Chemicals will be used in storage area to extend their life.
Relationship between inventory and cost
It is reported that vendor-managed inventory (VMI) can reduce system cost. VMI is a coordinated system where a vendor is the decision maker for the time and quantity of retailer’s replenishment. It is also faster than traditional inventory system. A better coordination power for VMI since it is allowed for backorder situation. When the cost of raw materials increase, VMI has a better cost saving compared to the traditional one. The retailer cannot benefit from VMI when the cost of storage is more than the cost of capital. More than that, of the stock is out of demand, information flow from the retailers will be a useful factor in VMI system.
There is a possibility to practice inventory-production cost minimization in manufacturing industries. A efficient practice can help the organization reaching profit. These practices include manufacturing plant and a finished goods warehouse to contain products which is not rush to deliver to the market. Within the production system including raw materials and the components’ supplies. Unlike the traditional warehouse, inventory-production management have the power to determine how fast to produce a specific product. It depends on the company to place a right order at right time, right amount, right quality, which could make customer satisfaction without over raise up the price of product.
Suppliers and inventory is a fixed connection. It happen the most in the retail industry. Refer to the vendor managed inventory (VMI), there are two contributions. One is focus on supply chain with just only one retailer and one supplier. Then, they will investigate which is available to minimum and maximum which allow inventory levels at the retailer. The other contribution is to know which one item is produced in the production-distribution system. As a result, these practice can reduce the cost compared to the traditional one. It results from the saving of transportation cost. All these contributions would enhance company’s profit performance and avoid inventory holding costs.
