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    Reduce Increased Costs in 2018

    By Barry

    After a long festival holiday for Chinese factories, the production is back to normal finally. 

    It is believed that many customers have received, seen or realized some signals about the increase in prices.


    Some manufacturers even face the situation that they refuse some orders cause the increased costs. Increased costs also lead much pressure to customers, bring shock to the customers' plan and market. Some customers have to change the purchase plan accordingly. This is not a pleasure for both suppliers and customers.


    The cost increasing influence is not the same for various industries. However, in the face of the international trade situation, the exchanging rate and the big domestic environment, no matter which industry, it is the most influential factor.


    For example, our wooden box industry, from the first half of last year, not to mention the objective international environment of foreign exchange, the domestic government's strengthened management and strict inspection of environmental protection increased our cost to a large extent. For example, the dust treatment of grinding and polishing in the workshop, the safety and environmental treatment of spray painting, etc., these will lead a big cost directly happened in our workshop to improve it. On the other hand, cost increasing is from the downstream suppliers, such as carton factory. Due to environmental problems, many small and medium-sized carton factories which are unable to undertake environmental protection upgrading costs, collapsed. Those who have the ability to solve environmental problems, cause of the environmental materials cost increased and the limited output, the final carton prices have been increased over several times. This kind of packaging carton box for us in terms of cost was accounted for a very small part, but from the last year, the situation have changed. Also some hardware accessories, affected by the cost of electroplating, the price is also increased, more importantly even a serious delay of hardware will lead late delivery to final shipment.


    Faced with these costs, sometimes, as a factory, is really very helpless. If we don't raise prices to customers, the limited profit margins will be more stressful. If we raise prices to guests, we also worry that these costs will bring big trouble to customers. As a good supplier, a good salesperson sometimes is really like a Sandwich Cookie, which is embarrassing between factory and customers. On the one hand, we hope that factory can earn money, and on the other hand, we also hope that customers can earn money and we can develop together with customers. But how can the increased cost be digested?


    This question, I would like to discuss with you how you deal with it if you’d like to discuss too. 


    This year, one of our customers met this problem when they talked to us about their spring order this year. Customer is a very experienced buyer, he is very clear about the all costs of wooden box. When we adjusted the prices of the order, it was very unacceptable for him, because this was some old products, all the marketing plans are popularized. If the costs are increased, the impacts for them is not small. Their normal purchase frequency is two times a year, in spring and autumn. After communication with customer, to keep the costs increased as less as possible, the customer decided to adjust their purchase plan, placing their one-year order to us by one time, so that we can get a better material prices from downstream suppliers, meanwhile our factory can adjust the production plan in time according to the long-term order, which reflect the customers to significantly cost reducing by 3.5 points. This is a very pleasant result, and the customer is very willing to accept it, for factory, is easier to plan. The quality and delivery time can be guaranteed better.


    It is one solution to keep the costs low as more as possible. Different situation, different solution.

    Do not hesitate to communicate with each other, for customers and suppliers.



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