Optimization Of Production And Operations For K Company Based On Cost Control

Company K, a well-known player in the oilrig market of China, has a lot of problems appearing in different aspects driven by the transition and upgrading of Chinese economy. The first problem is over capacity. The weak recovery of world economy has further enlarged the probability of worsening economy and slowed down growth, with both the petroleum and petrochemical industries suffering from decreased business index, which consequently results in dropped demands on oilrigs for production. The second problem is the weakened price strength. The manufacturing cost of some products is higher even than the sales price of similar product by the competitors. Therefore, it is of great significance to study the factors resulting in these problems so that to cut down the manufacturing cost and enhance product competitiveness of the company.Theoretical analysis on the production and operation management, as well as cost control, of Company K was made from the angle of operation. Problems existing in the cost control field were identified by analyzing the production and operation of Company K, competitors of Company K as well as the incurrence of production cost. Later, based on the analysis result, an optimization proposal was raised pertinently, and a cost control system focusing on the production and operation was set up, for the purpose to cut down the manufacturing cost of product and enhance competitiveness of the same. This system is built with emphasis paid on five elements: human, machine, material, law and environment, to be more specific, the optimization of human resources, optimization of equipment management, optimization of inventory, optimization of quality and CI/IE optimization. Phased effects from implementing such optimization proposals indicated that huge financial benefits were obtained by the manufacturing plant of Company K, which then helped consolidated the leading stand of the same in the oilrig industry.It was found by the author, when analyzing the production and operation issues of Company K, that special attention shall be paid to the following three aspects:(1) the cost control shall be carried out constantly and effectively, with market demands as the orientation, it is only by this way that the product competitiveness can be enhanced;(2) a scientific management system shall be set up to carry out the cost control work with total involvement. Such system shall cover the whole process and all aspects of production and operation and shall be improved along with the time;(3) production and operation optimization based on cost control requires the collaboration of human resources, production, material, financial and other departments. Practice has proven that the production and operation management mode based on cost control is at present an effective measure to improve the competitiveness of enterprises. It is a management mode worth learning.