The following casting price breakdown is typical of the foundry industry, not much different than other manufacturers. In foundries it is very difficult to cut material costs as they are world priced commodities and energy costs. Significant cuts in admin, overhead and plant expenses cut deeply into capability and service. If the industry eliminated all profit, it would barely satisfy the 4% demand.
You may have lists of names of people to follow up with. People you've met at networking events. Someone that somebody else suggested you get in touch with, heck even former customers.
How do you get yourself to pick up the phone? What do you say? How do you get someone to call you back?
It's not as hard (or as horrible) as it sounds. Follow the following five rules and before you know it you're going to be looking for people to call because you're having so much fun.
Manufacturing plants have only four ways to lower the selling price:
1. Engineer out part specific costs
2. Improve overall productivity
3. Increase sales to spread overhead
4. Cut the margins
Rule 3: What would you respond to? This is key. Imagine you got a phone call from someone asking for your time. Or someone left you a message asking you to call back. What would make you say yes? What would make you want to return the call? Would you call someone back who said "I want to speak with you about three ways you could improve your profitability?" Or would you be more likely to respond to someone saying "I'd like to get to know you better because I have a lot of contacts and want to be able to make the right referrals for you." Now, I'm not saying that one of these is right or wrong … the question for you to consider is what would you respond to?
This continuous improvement in casting prices is seriously threatened by a purchasing practice that is becoming more and more prevalent. Large companies, particularly those with listed stocks, are demanding 60, 75 and even 90 day payment terms. The supplier has to invest in account receivables rather than new plant and equipment. While this gets a short term benefit to the customer it can be disastrous in the long term.
The third selling price reduction option is to increase sales to spread overhead. In today’s market, not a very realistic option. With the pricing pressure for new or transferred work at unbelievable levels, new work has a lower margin than existing work. What used to be a good way to increase profits is likely to just push more products through the plant and wear out equipment faster.