Case: Cost-Efficient Techniques for a
Copper Wire Manufacturing Firm
Background
The copper wire manufacturing firm is a medium-to-small scale operation that purchases
processed copper rods, draws wires of various sizes, and sells them to wholesalers and
retailers in Ahmedabad. In today’s competitive market, the firm is facing pressure to reduce
production costs while maintaining product quality. The goal of this case is to explore cost-
efficient techniques that can be implemented to optimize operations, minimize waste, and
improve profitability.
Key Cost-Efficient Techniques:
1. Optimizing Raw Material Procurement:
- Bulk Buying: Negotiating better deals with suppliers by purchasing copper rods in bulk.
This can provide economies of scale and discounts.
- Vendor Diversification: Exploring multiple vendors to find the most cost-effective and
high-quality sources of copper rods.
2. Efficient Production Processes:
- Energy-Efficient Machines: Installing energy-efficient wire-drawing machines and
furnaces to reduce electricity consumption during the production process.
- Preventive Maintenance: Establishing a robust preventive maintenance schedule to avoid
unexpected machine breakdowns that could lead to costly repairs and downtime.
- Automation: Implementing automation for certain parts of the production line, such as
wire drawing and packing, to reduce labor costs and improve precision.
3. Waste Minimization:
- Scrap Recycling: Recycling copper scrap and offcuts from the manufacturing process. This
can either be reused within the production process or sold for revenue.
- Quality Control Systems: Implementing advanced quality control systems at multiple
stages of production to reduce the likelihood of defective products, which can lead to
material wastage.
4. Lean Manufacturing Techniques:
- Just-in-Time (JIT) Inventory Management: Minimizing inventory levels by adopting JIT
practices, reducing storage costs and ensuring that copper rods are available when needed
without overstocking.
- 5S Methodology: Using the 5S workplace organization method (Sort, Set in Order, Shine,
Standardize, Sustain) to improve shop-floor efficiency, reduce clutter, and streamline
processes.
5. Packaging Efficiency:
- Bulk Packaging: Shifting from individual packaging to bulk packaging, where possible, can
reduce packaging material costs and speed up the packing process.
- Eco-Friendly Packaging: Sourcing cost-effective and sustainable packaging materials,
which may reduce costs and appeal to environmentally conscious customers.
6. Energy Optimization:
- Energy Audits: Conducting regular energy audits to identify areas where energy
consumption can be reduced, such as upgrading lighting to LEDs, optimizing the HVAC
system, or implementing smart energy meters.
- Renewable Energy: Exploring solar or wind energy options to reduce dependence on
traditional electricity sources, especially for large energy-consuming machinery.
7. Supply Chain Optimization:
- Optimizing Transportation Costs: Collaborating with logistics providers to consolidate
shipments or use fuel-efficient transport modes for distributing products to wholesalers
and retailers.
- Regional Warehousing: Setting up warehouses in strategic locations to reduce
transportation costs and ensure faster delivery times.
8. Workforce Efficiency:
- Employee Training: Investing in workforce training to enhance productivity and reduce
the learning curve for new machinery, reducing human errors and improving output
quality.
- Incentivization Programs: Offering productivity-based incentives for workers can improve
efficiency and reduce overall labor costs by motivating employees to meet production
targets.
Potential Benefits:
- Reduction in material waste
- Lower energy costs
- Improved labor productivity
- Enhanced product quality, leading to fewer returns or defects
- Lower logistics and packaging costs
- Increased profit margins
Questionnaire for Firm Owner
To gather more detailed information about the specific operations of the copper wire
manufacturing firm, the following questions can help guide a more comprehensive analysis:
1. What is the current cost structure for raw materials (processed copper rods) and how
frequently do you purchase them?
2. What types of machines are used in the production process (wire drawing, packing, etc.)
and what is their energy consumption?
3. How do you handle copper scrap or waste material generated during the production
process?
4. What is the current packaging process, and do you use individual or bulk packaging for
different product sizes?
5. How do you manage inventory for raw materials and finished products? Are there
challenges in storage costs or stockouts?
6. What are the main challenges in terms of workforce productivity? Is there any ongoing
employee training or upskilling?
7. What percentage of your operating costs is attributed to energy consumption, and have
you considered renewable energy options?
8. How are your logistics and transportation costs structured? Do you have any strategies in
place for optimizing distribution?
9. What kind of preventive maintenance program is in place for the machines, and how
often do you experience machine downtime?
10. Are there any customer feedback mechanisms in place regarding product quality or
packaging issues?
