Recently a reader of one of my blogs put for the notion of the ultimate manufacturing cost. I worked in manufacturing for a number of years and I must say there is no such thing as the ultimate manufacturing cost because cost without the consideration of total units manufactured and sold means nothing. Either you are a “one off” jewelry designer or a jewelry manufacturer where volume is the name of the game. These are two very different approaches. There are numerous costs that go into conceptualizing, researching, developing, manufacturing, marketing, selling and delivering jewelry. Understanding a manufacturing company’s core competencies and how it can best compete is a dual task of management and marketing that requires operational expertise, marketing knowledge and business intelligence. All manufactured jewelry should be created with a specific retail customer in mind who is looking for or finds a certain quality level, fashion design, and accessory appeal of a particular jewelry piece to be highly desirable. The piece must be in the right retail price range to be perceived as reasonably affordable and ultimately obtainable. Considering the selling and marketing capabilities of channel partners is part of the process of arriving at the right retail price for jewelry. There are vast rewards to manufacturers who align themselves with the most professional and most successful retail jewelers; stores that competently and consistently create lots of product turns in the categories of jewelry they manufacture. Understanding the selling capabilities of a manufacturer’s resellers is critical to the success of the category, quality, design, price and eventual sale of jewelry offered.
What category is the item competing in and what other items is the proposed jewelry competing against? At what price range will the jewelry be offered at and how competitive will the jewelry be given the current inventory resellers already have in stock? How has the price range of the proposed product been moving for the manufacturer’s retailers? Are quality adjustments called for to bring the value of the design more in line with the most sellable price range? What jewelry buyer motives will the piece best serve? How receptive are sales managers and sales associates of resellers to the proposed product’s design and price range? What products will this proposed new product most likely replace for the resellers and the manufacturer? This is how you arrive at answering if the product has the look of a proposed retail price. My suggestion is to review some of the company’s best examples of jewelry that offered exceptional eye value. Those pieces that looked like they should cost more than retailers would routinely mark them up to sell at. What design elements and quality levels went into each piece? What price range did they fall into? How have those price ranges and quality levels been selling lately? What costs have radically changed and now make those items no longer qualify as exceptional eye value? This is a dynamic industry and as things change so too do opportunities. Tracking exceptional material buys and rising costs are part of developing the right manufactured jewelry offerings. Understanding what to manufacture and how to manufacture the product so it can be offered at a specific retail price is required business intelligence. Too often a good buy on materials dictates manufacturing decisions at the expense of selecting the right design quality.
Jewelry manufacturers need to always be on the lookout for ways to reduce costs and implement manufacturing improvements to streamline production and improve profitability. U.S. manufacturers need to become more able to compete globally by confronting one of their main challenges . . . competitors with very low labor costs. What sort of information technology (IT) tools have been considered to help strengthen manufacturing capabilities and add new levels of quality and consistency? How does the company use IT to improve supply side and finished goods inventory reductions, reduce energy use, and improve operational efficiency? What about reductions in scrap, defects, downtime and more efficient scheduling of resources.
Is the manufacturing company too restricted in its ability to objectively review new manufacturing techniques and processes that require making changes from current methods and procedures? How can jewelry manufacturers use the elements of designing processes and procedures to reduce manufacturing operational costs and administrative costs while improving complete and on-time shipments and customer satisfaction and improving manufacturing schedule compliance? It’s not about ultimate manufacturing cost . . . it is about designing real time information systems that support better decision making. Designing and continually improving processes and procedures to deliver more desirable and more effectively differentiated manufactured jewelry.
What about those proposed new jewelry pieces that cause a conflict between a marketable design and the current capabilities of the company’s manufacturing methods and equipment? Is this the number one reason why jewelry manufacturers at times find they lack creative approaches to new designs? Are newcomers politely brow beaten into submission when these new employees offer designs that don’t comply with existing manufacturing methods and capabilities? What about finding a balance between not considering new designs that the company cannot make today and an approach that encourages more creative designs by actively researching new manufacturing techniques through expanded uses of existing equipment and the consideration of new capabilities? Perhaps more creative approaches on the manufacturing end and not just on the design end are needed? When was the last time manufacturing managers spoke to their equipment vendor regarding current manufacturing processes to learn if there are additional techniques they might learn and begin using? How many new design manufacturing capabilities/techniques exist that might be available with minimal expense and effort?
The most expensive quality a manufacturer can put into an item uses tried and proven manufacturing methods to create jewelry designs that are too old to excite jewelry sales people and jewelry customers and consequently- the items don’t sell. Once again, a balance is needed between well proven designs that do not cause quality issues and using new designs that may have some risk based on quality concerns that might arise. What sort of knowledge base have manufacturing employees created that document each type of quality concern the company has been exposed to on a product by product category? This is business intelligence that needs to be documented into explicit knowledge. How does the manufacturing team use this information when testing a new proposed design? How many issues can be identified within each jewelry type of design? Take channel settings . . . How many different manufacturing concerns can be identified using the knowledge base of the manufacturing team? Is the company documenting this sort of knowledge? Downsizing restrictions is one concern. Now finish the list to get an idea of how to create a file full of ideas of how to qualify each proposed jewelry design based on potential quality concerns. How does the company use past manufacturing experience to discern what new designs have potential quality issues and which ones don’t?
Management can’t expect to have perfect recall each time there is a need to review a new proposed design. Manufacturing needs to be supported with a process in place that takes into consideration valuable past experiences. How does the company use the expertise of vendor’s to help anticipate any potential quality issues that might arise from a proposed new design? Don’t operate in a vacuum. Leverage the expertise of all members in the channel of distribution. Managing a jewelry manufacturing company is not about being practical as much as it is about practicing well developed processes and procedures. Design the right approaches to managing the business and when in doubt ask the customers. As a customer- ask vendors more questions. Learn from customers and learn as a customer . . . just never stop asking questions and learning.