Coping Strategies — Rising Cost Of Commodities
This often shifts pricing structure to more than compensate for rising consumables costs. Graphic communications service providers who are following this strategy are reporting growth rates far in excess of industry averages. Talk to your customers. Find out what keeps them awake at night. And be creative about helping them to sleep better.
Recycling is another way to lower costs and, of course, it’s also good for the environment. As Sund points out, scrap aluminum prices are rising with the increase in aluminum prices, so recycling used aluminum-based plates is a natural, as is recycling paper scrap. If you are still using film-based processes, silver extraction and recycling is also worth the effort at today’s silver prices.
It is also important to ensure that your employees have access to adequate training, and that you work on employee retention strategies. It would be a shame to lower costs for materials acquisition only to squander those savings because employees are poorly trained.
It’s hard to say whether prices will come down. As all business managers know, costs are dynamic, and while some go down, others go up. This makes for a tough balancing act for executives, and having the discipline to manage costs requires a longer-term perspective.
Cost management at Southwest Airlines has become a weapon against larger competitors—they deliver profits despite selling tickets at lower prices. At WalMart, costs are lower than competitors not just because of their legendary ability to negotiate better prices from suppliers, but because their investments in logistics and computing have been larger, more strategic and more effective than their competitors.
As we continue to deal with increased competition in our industry, not only from each other, but from alternative media such as e-mail and the Web, we don’t have the luxury of simply raising our prices. But by deploying some of the strategies discussed here to reduce costs and to increase your value to your customer base, you can improve your profitability in spite of today’s challenges. PI