Huaxiang Business School | How to do "Production Cost Management"


Huaxiang Business School

"Huaxiang Business School" stimulates the hidden learning nature of the Huaxiang people and makes the Huaxiang team become a more professional.


On May 12, 2022, the new course of Huaxiang Business School was held as scheduled, focusing on "Production Cost Management".


"The most terrible waste of a company is to produce products that customers don't need." The company's most important task at present is to control quality and improve customer satisfaction. At the same time, be sure to clear inventory, reduce losses and fees. The dean of Huaxiang Business School conveyed the general manager's request for this training.


This "Production Cost Management" course was lectured by Deputy General Manager Li Maozhang of the Manufacturing Center. Vice President Li divided the course into four chapters based on his personal experience and theoretical knowledge.


Definition of Production Cost Management

Production cost management is a general term for a series of scientific management behaviors such as cost accounting, cost analysis, cost decision-making and cost control.

In short, it means to save resources as much as possible and everyone understands their job responsibilities.

Taking battery production as an example, any mistakes during the process, from planning, R&D, production, to the final product, can become a big problem.


The purpose of production cost management

Mobilize all the personnel of the enterprise to carry out scientific and reasonable management, and achieve the maximum production results with the least cost.

Production is systematic: after receiving the order, clearly arrange people to do it. This can avoid waste of energy consumption and low production efficiency caused by poor communication. In this way, waste can be eliminated from the start of production process.


Contents of production cost management

The content of production cost management can also be divided into "uncontrollable costs" and "controllable costs".  

Product development costs are uncontrollable. The price of raw materials and the single product pricing of finished products are determined by the market, and these are costs that cannot be saved.

The controllable costs involve many aspects and is roughly divided into four parts.


1. manufacturing cost

The core is how to reduce waste costs in production. One important factor is the labor cost, including the idleness and domination of personnel, and the loss of employees in key positions. The mentality and sense of responsibility of employees are also important factors. More encouragement should be given to employees, which will greatly enhance the team's collective sense of honor and sense of responsibility, thereby reducing production scrap.

Another important factor is the cost of equipment, which improves the operation rate and utilization rate of equipment and avoids accelerated wear and tear due to improper maintenance.


2. production management cost

(1)Strengthen human resource management to avoid overlapping posts and overstaffing.

(2)Make the most of work time.

(3)Improve the level of mechanization, and reduce labor costs.


3. Raw material loss cost

(1)The material delivery adopts the principle of “first-in, first-out” to avoid material loss and damage caused by storage for too long.

(2)Keep the inventory at reasonable amount in warehouse. Formulate the Warehouse Age Analysis Report, and submit it to the Finance Department every month to avoid the backlog of inventory materials.

(3)The PMC department should arrange the procurement plan reasonably according to the priority of inventory reserves, material procurement cycle and time requirements for purchasing materials.


4. quality fee

(1)Improve product quality and reduce costs

(2)Reduce inventory

(3)Reduce machine downtime


The role of production cost management

Cost management has the characteristics of being systematic, comprehensive, reasonable and scientific, and it is of great significance to increase production and reduce expenditure, strengthen cost accounting, improve enterprise management, and improve the overall level of enterprises.


Above sharing from Vice President Li won warm applause. The trainees realized that some of their previous "bad habits" may have invisibly increased the company's production and operation costs.  

Several students took turns on the stage and talked freely about their experiences.

Huaxiang Business School | How to do

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