How to Reduce the Cost of High Production

Production costs are undoubtedly top of the list for artisans, designers and small businesses during the creation of their products. By taking a look at your expenses and introducing some simple yet highly effective cost-cutting measures, you will see a significant increase in profitability and benefit from a business that is running more smoothly with the highest rates of productivity.

Material world

While materials are obviously an integral part of production and crucial to its construction, using low-cost materials can be one of the most effective way to reduce production costs. With such a wide variety of materials available on the market and a wide range of suppliers, producers must research their options thoroughly to find suppliers who can offer the best quality materials at a fair price. Once you have established a relationship with your suppliers, it will become natural to negotiate for better deals and save even further. Another aspect to consider when choosing your materials is that it may sometimes be more cost-effective to purchase more expensive materials as this may simplify the production process and save on labour and time costs. It is essential to consider all factors when choosing your material – do not sacrifice the essential qualities of your product to save money, e.g. using a lower cost material for a product such as a silk scarf, where the customer will be relying on and expecting the highest quality piece. However, do ensure that you focus on removing any high cost features that offer no added value to the customer.

Keep it simple

Any producer will know that it is essential to have the customer in mind at every stage of the design process. To this end, it is well worth considering how your designs themselves can work to keep costs down. If your clients are seeking simple products with clean lines, then don’t break the mould. While experimentation is the name of the game in the production World, don’t make the mistake of adding parts to your products just for the sake of it, e.g. adding sequins to a classic shift dress if your typical customer is a businesswoman looking for items to add to her work wardrobe. Once you have defined what your customers are looking for, stick to what you know and don’t waste money in trying something too wild. By all means be adventurous but know when to draw the line and don’t add features to your product just for the sake of it. Invest in perfecting the best qualities of your designs and the features that your customers love, as this is where the profits can be made. With this business model, you will reap the benefits of an established customer base and continue to attract new customers who will love your solid business model and brand integrity. You will also be able to save money through a standard-part, streamlined design process, avoiding the need for sourcing and purchasing materials and design embellishment that are more expensive and more difficult to locate.

Supply and demand

Finding a supplier is never going to be a problem, always remember that these suppliers are relying on your demand. Invest time in considering which supplier to use for every aspect of your business, from the materials and design equipment all the way down to the office supplies. The market is packed with suppliers – listen to recommendation, pay a visit to the supplier to verify the quality of their product and, above all, always choose the one that offers the least expensive quality products. Within a rocky economic climate, there will always be someone willing to negotiate a cheaper deal if that means they can secure your business. That is the nature of a competitive marketplace.

Once you have found your suppliers of choice, make sure to negotiate. Know your value as a designer and use your skills as a businessperson to work out cost-effective deals that will help you in both the short- and long-term. A long-term supply agreement can be one of the most effective ways to reduce unnecessary costs and will save on a lot of admin, as you will be dealing with one company over a long period of time. An automatic resupply deal, for example, will avoid the need for purchase orders and inventory costs. This can be especially valuable for artisans, who may have trouble meeting the factory minimum in both quantity and price. A longer-term solution is the ideal choice to reduce costs and keep finances in check whilst developing mutually beneficial relationships. Often this negotiation can go even further – if you are purchasing your products from a supplier who is buying them from a raw material supplier, you can attempt a negotiation further down the production line and build new relationships in the process. The more contacts you have, the more prominent your name will be and the more likely you will secure a good deal. Joining the Kakakii seller community for example is one of the ways in which you can increase your network and build relationships.

Long-term focus

Another money-saving alternative is to come up with a price plan and pay the supplier over a number of months or years, negotiating with the promise of a long-term business relationship. Another option is to use local suppliers and do your own pick-up, as well as offer a reliable promise to recommend them to others. All supply companies are aware of the value of word of mouth recommendations – and you may be surprised at the benefits you will gain. And remember, if you don’t ask you don’t get! Maximise your position as a buyer and always ask both suppliers and vendors for a discount. If they are not able to offer this, perhaps you can ask for a cheaper deal at the next transaction or another benefit such as free delivery or a faster delivery time.

Join the Kakakii Marketplace

Our marketplace serves sellers, designers, artisans and producers who are based in Africa and in the Diasporas, empowering them to sell to the World. When you Join Kakakii as a seller, you can connect with a wider supplier base, this can be a good sourcing strategy needed to boost your production strength and capability.