Effective management of raw material costs involves several strategies:
Bulk Purchasing: Buying in larger quantities can lead to discounts and lower per-unit costs. Long-term Contracts: Securing long-term agreements with suppliers can lock in prices and provide cost stability. Diversification: Sourcing from multiple suppliers can reduce dependency on a single source and mitigate risk. Efficient Inventory Management: Keeping optimal inventory levels can minimize storage costs and reduce waste. Substitution: Using alternative materials can sometimes lower costs without compromising quality.