Qualitative Analysis before purchase of a winder
Iam assuming that you have already looked at the above mentioned points.(previous post) You have alsodiscussed this matter fully with your plant manager and other powers-to-be. Now comes the time that one has to make the decision. Before you take the final step, it makes good sense to explore the following points:
1) Using our present in-house equipment....what's the best production speeds we can achieve.
2) How many finished rolls can we make per day using our present machine?
3) How many operators, packers, labellers etc does it take to make these rolls?
4) What's our per roll cost (for finished roll) not including raw material costs?
5) Additional costs should be factored in for heat, light, water and exact electrical usage.
6) What is the customer paying for these rolls? (that is from its present supplier)
7) After calculating these costs...can we even do this job at a decent profit?
Now let's look at this a little more closely. As an example, if your customer is paying 20 cents per roll( all nicely packed etc), and your calculations indicate that your total cost per roll, using your present equipment is 50 cents a roll...then obviously you are not going to even try to waste your time bidding on this job.
However, as the owner, or the manager you will try to figure out why is it possible for your competitor to be able to do the same job at such a low cost. You kind-of-know your competitor and know for a fact that these rolls are indeed made in the USA. You have ruled out that he ( the competitor) is not running a sweat shop or importing these rolls from China. Totally frustrated you call a meeting of your top employees. Each one scratches his or her head offering no clues. Now you go into a slight depression and your hemorrhoids start acting up. You can't figure this out. As the owner you realise that if you do not get up to speed, soon you will be sitting at a train station, hat in front of you, strumming on a guitar, hoping for nickles and dimes. Not a pleasant thought at all.
Just like money makes more money and success breeds more success, failure leads to bigger failure....all these thoughts are going through your head....dark clouds are everywhere and noone seems to offer any clues. The last straw is when your wife comes home ( from her weight loss class) and tells you that Big Bertha (your competitors wife who also has a weight problem, and goes to the same club as your wife) told her that Harold ( her husband) is buying her a brand new SUV.
"How in the name of heavens can he afford that?" you ask
"Well" says your wife "He is making a 70% profit on this roll business". It is at this point, when the final nail has been driven into the coffin that you realise you need help and need it fast.
More details and solutions to follow.
