Cost of Production of Press Industry in Australia

Question: Discuss about the Cost of Production of Press Industry in Australia. Answer: Introduction The development of the modern world has led to the introduction of different innovative techniques and equipments, which has led to the increase in the standard of living of the consumers. The increase in standard of living leads to the increase in demand in the market thereby motivating the organizations to increase their production. It is known that organizations enter the global market in order to earn profit and therefore, the organizations strive on reducing their cost of production so that they can increase their profit margin and establish a strong hold over the market. The organizations generally try to maximize their profit by focusing on reducing their production cost rather than reducing the quality and service to the consumers. Production cost is one of the important aspects, every organization looks into so that they can introduce latest and innovative techniques to reduce their cost and increase their revenue and sales in the market. An industrial firm needs to create a sustainable design process optimization and process in the service and manufacturing unit to control and monitor the production cost (Acin et al, 2012). There exists a demand for improvement of the quality with reduction in price from the final consumers. Therefore, cost of production has become a residual. The current paper tries to analyze the cost of production of press and printing industry in Australia through different management and engineering tools. The study even discovers the different alternatives like shift in technology or the use of some substitutes to decrease the cost of production by improving the quality of service and maintaining the competitive edge in the market. Analysis The cost of production management of press part production is a continuous ongoing improvement program that monitors the production cost so that it works according to stipulated cost time framework. In the current market, most of the press part industries are using cost reduction as a strategic imperative. The organizations want to increase their competitive edge in the market by increasing the gap between the cost of themselves and of the competitors and reuse the resources for profitable growth (Su et al, 2015). A business firm needs to survive, expand and prosper only if the costs, which are unwanted, can be restricted and controlled. The cost reduction and management technique is one of the newest on the edge competition from various organizations of the world. The cost of production method is inclusive of fixed and variable costs pertaining to the manufacturing of the product. Fixed Costs are those costs that do not change with the change in output and these costs include rents, insurance, depreciation, start-up costs and the normal profit. These costs are also known as Overheads. Variable costs refer to the costs that changes with the output and they are also known as Direct Costs. These costs include typical costs like raw materials, fuel and some labor costs. The fixed cost and the variable costs are the most important costs, which changes increases the cost of production. It is seen that the organization process that is used in the printing process uses extensive plant and machinery along with raw materials like paper, ink, rent of the factory, insurance, labor cost etc (Sowell 2015). The service provided by the press and printing industry include the news they provide to the consumers and therefore the cost inclusive to them are the salaries to the employees and the establishment and the operational work that are being used for proper functioning of the business. Therefore, it is important for the organizations functioning in this sector to monitor their cost of production from time to time so that a check over the production cost can be maintained and there is no loss of profit. The control over the cost is even essential for this industry as with the development of innovative technologies and taste and preference of the consumers it is seen that the organizations need to change their production process, which can lead to a rise in the cost of production (Shepherd 2015). Therefore, these industries need to eradicate the unwanted costs, which are included in the production process so that the cost of production is decreased to the original amount or even below that. The organizations concentrate on increasing their profit, which is only possible by reducing the cost or increasing the sales of the industry. Thus, the industries through their internal management process try to reduce production cost thereby increasing revenue and expanding thei r market share. The increase in competition has compelled the firms to increase the margin of safety of survival. This circumstance has forced the organizations to focus on the cost control and cost reduction techniques. Therefore, it is imperative to study the various tools and cost controlling equipments in order to get a better idea of the position the firm stands with respect to cost of production. The classification of cost is done according to its behavior and nature, which is essential in understanding the costs, which can be controlled and decreased. The industry concentrates more on the controllable and the non-controllable costs as this classification is helpful in determining how and what the organizations can control (Charnes et al, 2013). If the costs can be controlled then what are the steps that can be taken to control the purpose and the costs that cannot be controlled, hen what are steps can be done to overcome them. The cost management technique totally depends upon the decisions o f the management and it is the activity of management accounting (Mishan 2015). The cost of production technique is analyzed through traditional methods like TQM, TPM, Kaizen, Lean Manufacturing, Value Analysis and Value engineering, JIT etc. There are certain concepts and techniques that are being used to study the different areas of the industry and recognize the activities that can decrease the cost and enhance the working environment. These are the various technological and substitution methods that can be used for improving the cost of production of the printing and press sector. Cost and Cost Reduction Cost refers to the value or amount that has to be given out or paid in order to receive something. With respect to business, cost refers to the valuation in terms of money of effort, resources, time, material and utilities consumed (Shephard 2012). Cost even refers to the risk incurred and the opportunities that have gone into production and delivery of services and goods. Reduction in cost is referred as the achievement of permanent and real reduction in the unit cost of services provided and product manufactured without affecting their suitability of the intended use. Total Productive Maintenance (TPM) The Total Productive Maintenance is a tool used for the analysis of cost of production, which was earlier introduced successfully in Japan. TPM thereafter has spread rapidly all over the globe and has established itself as a renowned cost improvement program. The eight pillars of TPM are inclusive of autonomous maintenance, Kaizen method, planned maintenance, training, quality maintenance, office TPM and safety, health and environment. The eight pillars have been established in this tool in order to focus on achieving minimum break downs, Zero defects and zero accidents. The TPM process is useful in minimizing any unwanted risks that can arise in the business thereby reducing the production cost along with improving the time of production (Miles 2015). The press production industry uses this measure, tries to analyze the cost and production, and takes relative actions so that cost control process can be properly initiated. Total Quality Management (TQM) TQM refers to a general philosophical process that improves the operations of the business. This process is done through various complex analysis done by every individual employee and management. This process is applied during the front-line level, where clerical, production, and lower-level managers are deeply involved (Corchero et al, 2013). The various tools used to support the TQM process. They are as follows: Failure analysis Benchmarking Process management Statistical process control Product design control Plan to do act cycle Value Analysis and Engineering The technique of the value and engineering acts as tool by which whenever the cost of production with respect to the production of printing press in the industry, various alternative methods are used to reduce the cost. It is seen that various substitute methods were found to be better and equal performance at a reduced cost (EIA 2013). This analysis is found to be effective in various production processes. This process is useful in finding out various alternative methods in order to give the best production method at a lower cost of production. Lean Manufacturing The most fundamental philosophy behind Lean Manufacturing is to give out the best superior quality products and services to the consumers at a significantly reduced price and to help develop a prosperous and harmonious society (Mehta, Prasad and Choudhury 2014). It is significant to establish a organizational production system based on this traditional framework. Lean manufacturing has the power to justify production by : Completely eradicating waste in the production process To establish quality into the process To decrease cost through productivity improvements To develop and create integrated methods that will contribute to industrial operation. The word Kaizen if segregated means Kai meaning change and Zen meaning good. Therefore, it is seen that this method of cost reduction is for small improvements but is executed on a continuous basis and involves all the employees working in the organization. This process is opposite to the vast innovations (Ermisch 2016). This method does not require any investment. The principle is due to the fact that a very large number of tiny improvements are more efficient in the environment of an organization that very few quality enhancements of large values. The pillar of Kaizen looks to reduce losses in the working environment that affects the efficiency of the business (Manna, Manna, and Giri 2015). Just-in-Time Inventory System The look out of costs of inventory it is significant to differentiate between non-value added activities and the value added activities. It is seen that the value-added services provide value to a product or service at a given position in the production cycle or the supply chain; the consumers are willing to pay for activities that are value added because they make the service or product better (Granger and Hatanaka 2015). Non-value added activities raise the final cost of the product or services but do not raise the value towards the customers. The cost associated with the inventory warehousing of the printing paper items is a non-value added activity. The time on receiving the product, the concern of the customers is whether the product or the service is going to work and whether it is going to perform the function due to which it was bought. Just-in Time purchasing and production is helpful in combating the undesirable, non-value added inventory costs (Maesaki et al, 2014). The demand-pull inventory system is used requiring that resources arrive in the warehouse exactly as they are required for distribution and production. The aim of this process is to eradicate all non-value added activities. The above methods are the various technological and substitute-changing methods that can be used by the industries functioning in the press-printing sector so that they can reduce the cost of production and even increase the quality of product and service in the industry and satisfy the customers (Kaplan and Atkinson 2015). It is seen that all the various methods discussed are suitable for use in the press industry and all of the equipments can be used according to the need of the organization. Conclusion The above study tries to find out the meaning of cost of production and analyzes the various costs, which are pertinent in the printing and press industry. It is seen that cost of production is an important aspect in the press and printing industry in Australia and special attention is given over this aspect to reduce the production cost and increase revenue for the organizations working in the industry. The paper even points out the various equipments and tools that are technological changes or the substitution changes, which can bring about different various changes in the cost of the production and solve the various issues and problems pertaining to the business with respect to cost. It is seen that all the tools discussed above are suitable for use in the press industry and can reduce the cost of production and increase the competitive edge of the firm. Reference List: Acin, F.G., Fernndez, J.M., Magn, J.J. and Molina, E., 2012. 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