Every Business Owner Should Know This About Production November 9, 2015My BusinessOff

If you are a business owner, production and manufacturing might be a complete mystery to you. This could be true even if you happen to own a manufacturing company. A good business owner will know exactly what happens in different parts of their company. But, not all of them do and it’s important to understand the production part. All companies are reliant on production. You will either be producing a product, using a product, buying a product or selling a product. But, at some point, you are a part of the production process. That’s why it’s important to understand what happens. You need to know how it affects you and the business industry as a whole.

Producers Rely On Other Producers
If you sell agricultural machinery, you might have bought a couple hundred tractors. You bought them from a agricultural machinery manufacturer. What you may not realise is that that producer relied on another producer to provide the parts. You can think of this as a form of outsourcing. No matter what business you’re in, we imagine you will be participating in some form of it. It’s the best way to reduce costs. Some production companies are set up purely to be an outsourcing service. That production company could be reliant on CCTY Bearing to provide parts they need. What does that mean for you as a business?

Late Invoices
If you’re a supplier of the machinery, you might not pay the manufacturer until you have sold it on. This could take weeks, even months. While you hold onto the money, you are in a strong financial position. You have the money you need and once the stock sells you’ll get the profits. You can then pay the invoice from the producer, that you left out of pocket. But while they’re out of pocket, they’ve probably been unable to pay their suppliers as well. The supplier could easily have crippled multiple businesses by playing it safe. That’s why owners should always make sure business contracts are upheld. But that’s not the only way producers affect different businesses.

Damaged Reputation
As a business owner, you might think you don’t need to know about how the products you’re selling are produced. It’s not relevant because customers don’t see production methods. If there is any poor practice going on behind closed doors, it’s not going to affect your company. But, you’d be surprised. When the new Steve Jobs biopic was released, the current Apple CEO, Tim Cook was quick to take shots at everyone involved. Essentially, they accused Hollywood of villainous a great many who built a wonderful company. The writer of the film was quick to point out a person who sold a product that was manufactured by child workers in China should not be throwing stones. Needless to say there were no more remarks from the CEO. This is just one example of how the way your business operates behind closed doors can easily damage your reputation.
We hope you see now why it’s important to be aware of production, how it works and what it could mean for your company.

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