What is the Cost Goal of the LED Light Industry?

What is the Cost Goal of the LED Light Industry

The cost is the last goal of the LED light to discuss in our articles, but it is not the least important. In the LED tube industry, the companies compete directly on price, so the cost is the primary operations target. If the PAR16 LED manufacturer can cut the cost of producing the products and services, it can cut the price to the customers. Thus, it may increase the sales. Even if the companies do not compete directly on price, they are still interested in cutting their costs. If the company takes away one dollar from the operation’s cost, the company adds one dollar to its profits potentially. This is why the organizations pay attention to the cost goal. Therefore, the cost is a universally attractive target for all companies, not only to the LED bulb suppliers.

To cut the cost, the managers should know where the cost comes from. So the ways in which the LED light manufacturer can cut cost will depend mainly on where the factory costs occur. In other words, the organization mainly spends the money on the below areas.

Staff costs.
Facilities, technology and equipment costs.
Material and service costs.

Different organizations may have different cost structures. The cost structure is also not the same. For example, the cost structure of the wholesale LED track light is different from that of the LED tube. The difference depends on how costs categorize. However, people can summarize some common points.

The costs of the LED bulb retailers are constant and generally will not change for small changes in the number of customers in the shop. The facilities, such as the shelves, the air-conditioning system and the payment system are very expensive. All these things will involve in the customer service. Some of the retailer’s costs will be the payments to the outside services such as the cleaning company and the delivery company. There are more outsourced services. These are part of the operations costs. For an LED light manufacturer, the payment for raw materials and other suppliers will be greater than other costs. However, the wholesale LED track light designing company will have fewer costs on its suppliers.

The main costs will be staff costs, the high payments to the designers and technicians. Besides the product costs, the LED tube wholesaler spends a lot of money on the fuel, as it needs to offer frequent delivery services to the customers. In some extreme cases, some companies’ costs are mainly on buying the supplies. For the product costs, the PAR16 LED manufacturer can make a change, but an LED light retailer can do little about it. The sourcing department makes all purchasing decisions of the LED tube products, and other departments cannot influence the purchasing costs. They can only pay more attention to use the facilities, the building and the staff.

What is the Cost Goal of the LED Light Industry

Other operational goals also influence the cost goal.

The earlier articles discussed the function and effects of the quality, speed, dependability and flexibility for the operation goal. Through the discussion, the readers can get the value and function of each operation goal, and know the importance to the internal operation and external customers. All these performance goals have the internal effects, and they all affect the cost goal. The LED bulb production is an example.

1. The flexibility.

A flexible organization can react to the changing circumstances quickly without disrupting the rest of the production activities. The flexible operations can also adapt to the changes between different tasks quickly without influencing the efficiency. The production line of the wholesale LED track light is an example.

2. The dependability.

The dependable operations can react to the unpredicted changes on the internal activities. It is reliable enough to deliver the services as required. This will keep the operation working efficiently. The LED light manufacturer China is an example.

3. The speed.

The fast operations will cut the level of inventory between the production activities. It can cope with the flawed service effectively. The PAR16 LED manufacturer is an example.

4. The quality.

The quality operations can guarantee the job efficiency. It saves the time and effort caused by the errors in the work. The production line of the LED bulb is an example.

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