Cost Reduction – Water Storage Tank

By

Sunil Raithatha

Date: 25 th March 2009.

Overview

• Why Cost Control.

• Understanding Costing Structure.

• Methods of Cost Reduction – Direct Cost.

• Indirect Cost Reduction.

Why Cost Control

28 30 2935 38 38 37 39 42 43 45 48

5865 62 60

7080

105

70

2.21.82.2

2.22.122.22.4

2.52.42.52.42.22.52.62.52.4 2.4 2.6 2.40

20

40

60

80

100

120

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Series1

Series2

Series3

LLDPEPrice

28 Rs per Kg to70 Rs per Kg

Tank Prices2.4 Rs/Lit

Why Cost Control

Year 19901000 Lit28 Kg

Year 20081000 Lit20 Kg

Why Cost Control

• Transport cost is going up.

0

2

4

6

8

10

12

14

16

1990 1995 2000 2003

Per Lit

Why Cost Control

• Fuel Price Going UP

18 Rs. / Lit 35 Rs. / Lit

Why Cost Control

• Profit Per Liter Going Down

Why Cost Control

• Only Cost Competitive Manufacturers will Survive.

Understanding Cost Structure

• Costing Sheet Water Tank :

• Direct Cost :

– Raw Material

– Fuel

– Electricity

– Manpower

– Lid and Fittings

• Indirect Cost :

– Transport

– Interest

– Depreciation

– Maintenance

– Marketing

Understanding Cost Structure

Understanding Cost Structure

Tank Costing 1000 Lit

Raw Material, 1482

Elecricity, 12Manpower, 14

Lid & Fitting, 35

Screen Printing, 2

Transportation, 150 Overhead, 20

Fuel, 78.75

Raw Material

Fuel

Elecricity

Manpower

Lid & Fitting

Screen Printing

Transportation

Overhead

Method Of Direct Cost Reduction.• Direct Cost :

– Raw Material - Use Correct Weight, No Powder Spillage, Uniform Thickness , Uniform Temp, Proper Xrpm/Yrpm ratio. Mould Flange heating

– Fuel – Burner Setting, Low Process Temp, Shut off Burner before cycle time.

– Electricity – Stop Minor Axis During Cooling. Stop R-Blower during Loading Un-Loading Use Backup Generator.

– Manpower – Productivity of manpower. Two Machines at a time.

Method Of Indirect Cost Reduction.

• Indirect Cost :

– Transport - Keep Control on Cost of Transportation.

– Maintenance – Keep Machine well maintained.

– Marketing -

Conclusion

• There is no substitute to “ Cost Reduction”.

• Manufacturer with cost compositeness will only earn profit.

• Upgrade and Maintain your Machines.

Thank You