Save Money by Spending Money
This sounds funny, doesn’t it? But how true it is! Take the example of bad roads and traffic jams. Has anyone ever tried to calculate the cost of additional fuel, the cost of additional maintenance of vehicles, the cost of time wasted, the cost of nervous jams. All this adds up to very big money indeed. Money spent now on improving the road and making some traffic flyovers might pay for itself entirely even within one or two years.
The cheapest Is Often The Most Expensive
Money spent on expensive forging presses, as against hammers, might be a very big item of initial cost, but if you consider the increase in the volume of production and the improvement in quality final product, you may find that the big money spent initially gives a cheaper final product in long run.
Why is the manufacture of automation equipment one of the biggest industries in the World? Not because people like to have automation for the love of it, but because it means a larger volume of production, lower costs and better quality.
“Cheap Equipment Is Very Often the Most Expensive As It Leads to Serious Loss of the Breakdown.”
Cost consciousness does not mean cutting costs everywhere indiscriminately. Take the example of a computer. It costs a lot of money; it might not pay for itself in the early years, but after that it will pay hands down by way of better service and better co-ordination and speed.
Good Quality Pays
You will find that good conditions – clean, tidy and well laid-out workshop and offices – will always lead to better work. The extra expenditure on good housekeeping will pay for itself at a later date money time over.
There is always a strong temptation to buy something cheaper. But have you examined all aspects of the purchase? Will you have any serious loss of production due to breakdowns? Are you standardizing? Will the lack of an essential spare lead to an expensive delay? It’s not always the cheapest that is the most economical. Every aspect of the case must be considered.
I find that money spent on providing subsidized lunches for our employees in our own canteen is a very good investment. It means that far less time and effort is wasted during lunch.
“The Cost of Production in the Long Run Will Also Be Much Less Than Under Our Previous Method, If Highly Automatic, but Expensive Equipment Will Bring out Great
Wise managers look far beyond the immediate horizon. They try to visualize in term of money the savings which an additional expenditure will bring them in the future. This additional expenditure might lead to a better quality product which would mean higher sales. Additional expenditure might result in fewer breakdowns; this in its turn would lead to a saving on maintenance costs and also to a higher volume of output. Additional expenditure might lead to greater speed in work. Another advantage of additional expenditure may be less frustration and nervous strain; very important factors, but factors which cannot be measured in term of money.