- REMOVING INTERMEDIARIES-Wherever possible buy directly from manufacturers
/authorised dealers /OEM not from any agent /dealer or commission agent . Lesser the
intermediaries lower the rate .
- NON - BRANDED ITEMS-Look out for non branded items for non - critical areas as
branded items has premium attached to it .Some times you can get good items which are
non - branded just in case of garments.
- RECYCLING AND REUSE-All items come into some form of secondary packaging and out
of which some of the items can be reused or recycled .Ask vendors to reuse /recycle
packing items . eg cans , sacks , bottles , cores trays and pallets etc .
- CONVERSION S-Buying primary material then giving it to processor instead of buying
directly from the converter , it helps in two ways as we can avail modvat exemption on the
raw material and can eliminate the premium on conversion egKraft paper for cbbs .
- MAKE AND BUY DECISIONS-Few items can be made in house rather getting it from
outside eg grounded sugar , cashew nuts etc .
- NEGOTIATIONS-The price should always be negotiated with all information available .
Prices are when you are informed and aware of options available .Always check prices
with alternate sources .
It helps in reducing inventory cost .
- ECONOMICAL ORDER QUANTITY ( EOQ )-This is the maximum qty of item which you can
place to an vendor taking into account the frequency of items used .
- INSPECTION-By eliminating inspection at factory and asking vendors to provide materials
as per standards and completing inspections at their end we can eliminate delays and
manpower used in these kind of activities .
- SCRAP MANAGEMENT-Segregation of scrap generated in a manufacturing unit is
important .It has been observed that all scrap are sold as lot to scrap merchant who in
turn segregates it in different categories and sells it in at higher rates .
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COST REDUCTION IDEAS - PROCUREMENT