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Cost Management in Plastics Processing
Smithers Information Ltd, April 2002, Pages: 150
Above all else, plastics processing companies need effective cost management to survive. This book examines the issues from how costs are calculated by accountants, to the effective use of machines and labour, to the minimisation of waste.
What is the true cost of any project? Are the overheads properly allocated? When is investment in new technology required? Are your best customers nurtured or treated like the rest? Do you hold too much inventory using up cash? Is just-in-time manufacturing working or should we be looking at Colin New’s concept ‘the return of the Jedi’ (just enough desirable inventory)? These are just a few of the subjects discussed in this provocative book.
The book begins by looking at traditional methods of accounting and costing and whether these are helpful or accurate for project management. When costs need to be reduced, why is it that the labour force is targeted first? In 1996 the direct labour cost of manufacturing operations was only 10% of the total costs, while the company overheads amounted to 35%. What about examining the overheads and finding ways to reduce them? The author argues that the largest costs should be tackled first, as these the areas where the biggest savings can potentially be made.
Design is critical to the cost of any project. Are components made using too much material? Are there too many unnecessary features and not enough that the customer really wants? Is the material in use over-specified (materials constitute one of the largest costs in any project)? The author takes readers back to first principles.
The advantages of working in cells and using smaller machines are described. Finding out where bottlenecks occur and solving the problems surrounding them is discussed. Energy efficiency is another big area for improvement in many companies and the costs can be reduced significantly.
Over the years many different methods have been developed for analysing and solving problems in manufacturing. A selection of these are described here.
Practical examples of cost management in plastics processing are included, together with many useful flow charts and diagrams to illustrate the points under discussion. This is a book that will make you think about your current practices and how to go forward with effective cost management.
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