A business must analyze their various costs of production involved in producing a product and compare it with cost of buying the product from an external supplier. If the cost of buying is less than cost of producing the product, then companies can opt for buying the product. This could be extended to each phase of the production cycle.
Companies plan and forecast the demand according to the future needs of the market. Forecasting demand assists in decision making with respect to investment in plant and machinery, market planning and future sales. Some of the popular forecasting methods include
Companies strive to achieve quality standards like ISO 22000:2005, Six sigma, Deming awards etc. Total quality management along with Japanese techniques is widely practiced ensuring the continuous delivering of quality products. Nowadays a product without quality cannot exist in the market i.e. if a company is surviving, then quality is inbuilt. Quality forms the basis of survival of a company or a business nowadays. Quality audits and a lot of quality management practices are a means to ensure that the customer receives good quality product.
Inventory control is a planned approach of determining what to order, when to order and how to order and how much to stock so that costs associated with buying and storing are optimal without interrupting production and sale ...