Total Cost Minimization Is Critical - 1242 Words

Total cost minimization is critical to any business competing in a global market where there are inequities in wage, resources, and company costs. In order for a business to stay competitive, it must continually innovate to maximize efficiencies. Online shopping has given consumers greater choice when purchasing products, allowing them to shop virtually anywhere in the world for the cheapest price. It is therefore crucial for companies to be mindful of other retail prices. Certain variables that cannot be controlled by companies are hydro and gas rates, as well as annual inflation. November 1st, 2013 Ontario Hydro said: â€Å"The price of off peak power will rise by 7.5% representing an annualized increase of 15%† (Electricity Supply†¦show more content†¦For example, a local art shop might reduce cost by changing the materials needed to create their product, where as a large automotive company might minimize cost by manufacturing certain parts in a low-cost economy. A lthough effective, this brings about ethical topics such as child labor. Certain techniques must be applied to minimizing cost and maximizing profit. In 1908, Henry Ford revolutionized the manufacturing process during the production of the Model T. His intention of mass producing the Model T automobile accidently introduced the assembly line to society. The assembly line drastically changed the way companies manufacture products. The assembly line is a sequence of operations on a product moving down a conveyer. These operations are performed by stationary personnel at select locations. Ford’s vision to provide the Model T to the world revolutionized the way society manufactures products. Ford wanted to outrun the other competition, and created a more efficient and cheaper production line to mass produce the Model T. He accomplished this by replacing laborers with machines, making qualified personnel perform repetitive low-skilled jobs. By 1914 Ford was able to drop the price of the Model T from $800.00 to about $575.00. Mass consumption allowed Ford to minimize cost. Labors could easily be replaced because of low qualifications. Employees were outraged and refused to work. Ford responded back with a guaranteed five dollar pay increase which drew