How to win the market with "cost control"? First look at what they say

Price reduction promotion has become an important means of competition for manufacturers. For enterprises, price reduction is not just a simple profit-making behavior. In addition, price cuts can increase market share, and internally, it is an "internal revolution" of enterprises.

After experiencing the price war of the whole year last year, the prices of various products in the LED industry chain have generally been greatly reduced. So, will there be room for price reduction in 2016?

In this regard, the industry has different views. Some people said that as far as the current situation is concerned, enterprises should abandon prices for quality. In addition, some people believe that there is still room for price reduction in the LED industry in the future, but it is only a matter of how much it can be reduced.

"Cost" is the eternal topic of all manufacturing companies. Since price reduction is required, cost control naturally becomes the focus of most people's attention. How can we let enterprises carry out reasonable cost control, and what do people in the industry say?

Raw materials are the primary factor in controlling costs

It is undeniable that the price decline is a stage that the industry must undergo, and the direct cause of the price decline is the improvement of raw materials.

The downstream output of the LED industry chain should be based on upstream materials, but because the display of the material itself is not obvious, people's attention to materials can be easily weakened. Therefore, the emergence of new materials is also to reduce the unit lumen cost under the premise of ensuring the quality level.

Dr. Shao Pengrui, Technical Director of Jingtai Co., Ltd. proposed that the manufacturer's control cost first considers the optimal product design; then the product yield; and finally the design cost. If you want to control the cost of raw materials, you must choose the material that best matches the design and structure. New materials for LED packaging and LED design can not only affect the material itself, but also new packaging forms to effectively control costs.

“Saving costs on the basis of the same raw materials needs to be achieved by expanding production and scale,” said Liu Lin, deputy general manager of the same party.

Technology upgrade is the only way to control costs

Whether this part of the package can reduce costs will play a decisive role in reducing the cost of the entire enterprise. LED packages that support upstream chips and downstream applications require that their technology be continuously upgraded.

At present, light engines with extremely high cost performance advantages are increasingly favored by lighting companies. Zhao Kun, vice president of Xinli Light Source, believes that “the light engine itself has many advantages. Although the market has not formed so fast, the trend has gradually taken shape.”

Liu Lin also said that the light engine is a technological innovation that can integrate the power supply. This is more convenient for the lighting manufacturers to save a certain amount of manpower, and the price of the power source and the light source is cheaper than before, and the cost is directly reduced.

Technological innovation does not form an application overnight, so technical reserves are important. On the other hand, in terms of current market maturity, a single technology cannot be subversive to the market and needs the assistance of other peripheral technologies.

“Cost control is actually very difficult.” Xu Min, deputy general manager of Shanxi Guangyu Lighting, believes that technological innovation is king. The real technological innovation is whether the products produced can meet the needs of users.

Automated production lines are new drivers of cost control

With the intensification of price competition in the LED industry and the overall increase in local labor costs, the automation demand for LED supply chain links due to cost control considerations is particularly urgent.

Many LED equipment companies said that due to cost pressure, everyone has begun to put the automation production line on the development agenda.

When it comes to automation equipment, I believe that the most non-speaking non-sparks are the ones that have the right to speak. Zhao Yutao, chairman of Hyun Shuo Optoelectronics, said that even a small and medium-sized packaging company that uses only 50 machines can save about 7 million yuan per year. If it is a large enterprise, the effect is definitely better.

Wang Mengyuan, general manager of Zhonghao Optoelectronics Co., Ltd. also said that the automated production line has become a trend. At present, Zhonghao Optoelectronics is also using automation equipment on a large scale.

The higher the value of automation, the higher the quality, and the same side of the photoelectric also has an automated equipment production line. Liu Lin told Gaogong LED that small and medium-sized enterprises want to develop rapidly and can seize the market with listed companies. They must make full use of their own advantages and satisfy the requirements put forward by customers as much as possible. This requires automation equipment to achieve. Enterprises will also replace manpower through machine automation equipment, saving costs and improving efficiency.

Shao Pengrui believes that automated production is a matter of quantity and scale, and belongs to a systematic project. Automated production lines have been innovating, whether it is fully automated or semi-automatic, and every company is constantly pursuing. If the scale reaches a certain level and the product meets the requirements of the automated production line, the company will generally do it. In the future, Jingtai will also consider the field of automated production.

In fact, in addition to the above several companies, equipment companies such as Tengsheng Control Glue, Yitong Automation, and Zhongwei Optoelectronics have also launched automated production lines.

All in all, cost has become a major issue for many supply chain companies. Technology innovation, strengthening management, and improving production efficiency are all aimed at reducing costs. Many companies have also made cost control an important strategy for development.

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