7 Proven Strategies for Cost Management in the Cable Industry: A Comprehensive Guide for SMEs

Cost management in the cable industry has become more critical than ever due to rapidly changing raw material prices, increasing energy costs, and the pressure of global competition. Especially for small and medium-sized enterprises (SMEs), this has become a decisive factor for us in creating sustainable growth and a competitive advantage.

As the cost of primary raw materials, such as copper and aluminum, increases, companies’ profit margins fall, forcing them to either increase prices or improve operational efficiency. However, in a market where customers are highly price sensitive, this first path is not always possible. This is where cost-reduction methods in cable production come into play.

In this guide,we will examine in detail 7 proven cost strategies that can be implemented to ensure your business’s financial efficiency. Ranging from ERP systems to internal audits, from risk management to technological investments, these strategies not only reduce costs but also make your business more resilient and sustainable.

Now let’s move on to the first strategy: Why cost management is so critical in the cable industry starts by understanding what it is.

1. Importance of Cost Management in the Cable Industry
2. Understanding the Cost Structure of Cable Operations
3. Achieving Financial Efficiency by Utilizing ERP Systems
4. Internal Audit: Identifying and Eliminating Hidden Costs
5. Enterprise Risk Management: Reducing Financial and Operational Risks
6. Attention to Compliance and Regulations: Legal Requirements in the Cable Industry
7. Optimizing Supply Chain and Inventory Management
8. New Technologies and Automation Applications
9. Cost Management in the Cable Industry
10. Implications for a Sustainable Financial Future

1. Importance of Cost Management in the Cable Industry

In the cable industry, where profit margins are narrow and competition is intense, cost management is not just an accounting issue, but a vital factor for businesses to survive and succeed. 

Especially small and medium-sized enterprises (SMEs), by effectively controlling costs, can achieve Financial efficiency and be resilient to price pressures and economic fluctuations. In this introduction to Cost management in the cable industry, we will discuss why it is critical and summarize the basic dynamics of the issue.

The cable industry is an area characterized by intense competition and high price pressure. Especially in the global market, cheap production from countries like China increases price competition. local companiesIn addition, the dependence on raw materials (especially copper and aluminum) in the sector is very high; materials constitute part of the total production cost. More than 65% of price fluctuations in these basic inputs directly affect production costs. Due to these structural factors, cable manufacturers must focus more than ever on cost management in order to maintain their profit margins.

Small and medium-sized cable manufacturers compete with more limited resources than larger companies. Therefore, Cost reduction methods in cable production are critical, as they increase their productivity and become more resilient to cost pressure by implementing these. It is important to remember that a large company on a country scale may remain small on a global scale, and a small company may have distinct advantages over large companies.

For example, by improving production processes, preventing waste, saving energy, and investing in appropriate technologies, SMEs can both reduce their expenses and increase their competitiveness. Effective cost control provides these businesses with financial flexibility in the face of unexpected raw material price increases or economic uncertainties.

For long-term success, cable manufacturers must manage costs as a strategic priority because correct cost planning increases profitability and creates additional resources for the company’s growth investments.

Businesses that can keep their costs under control can achieve sustainable growth and permanent profitability despite market fluctuations. On the other hand, companies that do not give due importance to cost management may miss growth opportunities and become financially fragile due to narrowing profit margins.

Of course, in order to manage costs efficiently, it is necessary to first understand where the expenses in cable operations come from. In the next section, Understanding the Cost Structure of Cable Operations, we will discuss the topic in detail.

2. Understanding the Cost Structure of Cable Operations

Cost management in the cable industry is critical for a successful operation. Cable manufacturers, especially at the SME level, can maintain profitability and get ahead in competition by correctly analyzing the cost structure. In this section, we discuss cost components for cable manufacturers, concrete distributions in the Turkish market, and current economic effects. Cost components for cable manufacturers can be grouped into four main categories: raw materials, labor, energy, and overhead costs.

Basic Cost Components in Cable Manufacturing

• Raw Materials (Copper, Aluminum, etc.): Raw materials make up the largest share of cable costs. Especially copper and aluminum, as well as petroleum-derived insulation materials such as polyvinyl chloride (PVC) and polyethylene. total production cost. In a global analysis, raw material purchases account for a very high proportion, constituting up to 75% of cable production costs. In Turkey, costs largely depend on the raw material, as copper and similar conductive metals are based on foreign currency.
  
  For example, in the 2020s, the price of copper per ton rose well above historical averages, reaching $8,000-10,000 (it was $2,000-3,000 in the past). This dramatically increased the costs of cable manufacturers, and fluctuations in copper prices began to directly affect profitability. In response to the impact of raw material price fluctuations, manufacturers should prioritize efficient management of raw material use and the development of alternative supply strategies.
• Labor (Labor Costs): In cable factories, labor costs are a significant part of total expenses, but they usually have a smaller share than raw materials. However, labor costs have increased rapidly in Turkey due to high inflation. The minimum wage increases in recent years are particularly striking: from the beginning of 2022 to 2023, the net minimum wage increased by approximately 8.506 TL.
  
  Such rapidly increasing wages have created financial pressure on SMEs by increasing their personnel costs. Increasing workforce efficiency and reducing unnecessary personnel expenses have become more important than ever during this period. Cable manufacturers should aim to do the same job with less labor or more efficiently by improving their business processes and, if necessary, investing in automation.
• Energy Costs:Cable production involves energy-intensive processes such as melting copper and polymers, wire drawing, and extrusion. Therefore, energy costs such as electricity and natural gas take up a considerable share of the total. In recent years, an increase in energy prices has put pressure on manufacturers; with the global energy crisis and tariff hikes in Turkey, electricity costs in the industry have increased significantly.
  
  Indeed, the continuous increase in electricity prices throughout 2024 has increased the operational costs of large-scale producers. This has led many companies to turn to renewable energy investments to control energy costs.
  
  For example, some cable manufacturers have started to generate their own electricity by installing solar power plants on factory roofs, thus aiming to gain a cost advantage in the long term. SMEs can also manage this item by using high energy efficiency machines, reducing idle energy consumption, and evaluating renewable energy investments at an appropriate scale.
• General Expenses (Maintenance, Logistics, and Other): Administrative expenses, maintenance and repair, logistics, financing costs, and depreciation are also included in the cost structure of cable production. Although not as dominant as raw materials and energy, an increase in logistics costs has gained importance in recent times.
  
  Since most raw materials are imported, rising freight (transportation) prices and supply chain disruptions have put pressure on overall costs. For example, in the post-pandemic period and in the aftermath of the Russia-Ukraine crisis, freight rates have reached record levels, increasing the cost of delivering raw materials such as copper to factories.
  
  In addition, high interest rates have increased financing costs and made working capital requirements expensive. In order to control general expenses, businesses should reduce failure costs by planning maintenance processes, reduce the cost of excess inventory by keeping stock levels at optimum levels, and evaluate appropriate credit and incentive opportunities to reduce financing costs.

Cost Distribution and Trends in the Turkish Market

The distribution of cost items for cable manufacturers in Turkey is based on raw materials, similar to the components mentioned above. When looking at the concrete data, Raw materials can account for approximately 70–80% of the total cost For example, according to a presentation by a global cable manufacturer, 75% of the production cost across the industry comes from raw material purchases.

There is a similar ratio in the Turkish cable market; basic inputs such as copper, aluminum, and PVC constitute the majority of the cost structure. This is followed by energy costs and labor costs. In Turkey, as of 2023, there is an increase in the share of labor and energy costs due to high inflation conditions.

For example, official inflation reached around 60% by the end of 2023, and this was reflected in all input costs. In particular, increases in minimum wage and energy tariffs tend to increase the percentage of non-raw material costs in total. Nevertheless, volatility in raw material prices continues to be the factor that most affects the distribution of total costs.

The impact of raw material price fluctuations is a critical factor determining profitability in the cable sector. The price of commodities such as copper and aluminum changes frequently in international markets according to the supply-demand balance. For example, copper increased in the first half of 2024 due to increased demand from China, then stabilized with the weakening of global growth expectations. However, due to the volatility in the exchange rate, manufacturers in Turkey have become increasingly aware of every volatility in global prices.

The increase in the price of copper to 8-10 thousand dollars per ton has seriously reduced the profit margins of cable manufacturers, because it can be difficult to fully reflect this increase in the final product prices. For this reason, fluctuations in raw material prices can almost eliminate the profitability of cable manufacturers in some periods.

The impact of raw material price fluctuations on profitability. To manage the cost of energy, many companies follow strategies such as making forward-purchase agreements, closely monitoring commodity exchanges, or, if necessary, using alternative conductive materials. In summary, proactive management is vital in this area, as fluctuations in raw material costs directly affect profitability.

Reflection of Macroeconomic Factors on the Sector

In the big picture, inflation, exchange rate volatility, and supply chain issues deeply affect the cost structure of the cable sector. In developing markets like Türkiye, high inflation means that production inputs become much more expensive every year. In fact, consumer inflation by the end of 2023 is approaching 60%, reaching one of the highest levels in recent years.

This situation has increased local cost items, especially energy and labor. In addition to inflation, exchange rate volatility also brings great uncertainty to the sector. The depreciation of the Turkish Lira against foreign currency It increases the raw material and material costs with every exchange rate movement..

Because inputs such as copper, aluminum, and PVC are priced in dollars or euros in international markets, as the exchange rate increases, more TL needs to be spent to procure the same material. Moreover, since domestic cable sales are often made in TL and on credit, the fact that costs are indexed to foreign currency makes manufacturers open to exchange rate risk. As a result, exchange rate fluctuations can quickly erode profit margins.

On the other hand, global supply chain issues and changes in logistics costs are also reflected in the cable sector. During the pandemic period (e.g., COVID-19) and after geopolitical developments in 2022 (e.g., wars), container and freight prices increased, and delivery times extended. In the cable sector, which imports most of its raw materials, these disruptions made production planning difficult and increased inventory costs.

For example, industry representatives stated that the Russia-Ukraine crisis disrupted overseas supply processes and caused difficulties in copper supply. Rising logistics costs also increase the costs per product and negatively affect profitability. Finally, high interest rates, which are part of the macroeconomic conditions, increase the financing costs of producers in Turkey, making new investment decisions difficult.

For example, the increase in credit interest rates due to tight monetary policy in 2024 has led many cable manufacturers to postpone their capacity increase plans. In summary, inflationary pressures, exchange rate shocks and supply chain risks are the main external factors that complicate cable manufacturers’ cost management. Therefore, businesses need to develop flexible strategies by closely monitoring these macro developments.

Financial Efficiency for SMEs: Analysis and Action Recommendations

The key to increasing financial efficiency is for SMEs to effectively analyze these cost items and take quick action when necessary. Financial efficiency for SMEs. The following strategies can be followed to ensure this:

1. Regular Cost Analysis:Analyze all your cost items (raw materials, labor, energy, etc.) at regular intervals. Compare budgeted and actual costs to identify deviation points.
   Identify areas for improvement by tracking metrics such as raw material usage rates, scrap/waste amounts, etc. This way, you can see which items affect profitability the most based on data.
2. Raw Material Management and Supply Strategy: Be proactive against raw material price fluctuations. If possible, for commodities like copper and aluminum, forward purchase contracts can be used to reduce the impact of sudden price increases by making price-fixing agreements. Create alternatives against supply shortages by working with multiple suppliers.
   Additionally, by improving inventory management, you can take advantage of bulk purchasing opportunities for raw materials at affordable prices and avoid the financial costs of carrying excess inventory.
3. Energy Efficiency Investments:Use energy-efficient equipment in your production facilities to reduce energy costs. Steps such as renewing old machines and installing waste heat recovery systems can bring savings in the long run.
   For SMEs with a suitable scale, installing rooftop solar panels (SPP) can also be considered – many Turkish cable manufacturers have started to reduce electricity costs in this way by 2024. Monitoring your energy consumption and optimizing high-consumption processes will also reduce bills in the short term.
4. Increase in Labor and Productivity:Focus on efficiency to offset rising labor costs due to high inflation. Reduce error rates and rework needs by regularly training your employees.
   In production lines, automation and digitalization. Evaluate opportunities – for example, automatic cable cutting/winding machines or sensor-based quality control systems can increase productivity and reduce unit labor costs. Optimize workforce planning by avoiding overtime and unnecessary staffing. The importance of workforce training is well-known.
5. Overhead Expense Control and Financial Planning: Review your fixed costs. For example, you can reduce unexpected repair costs by improving your maintenance plans and minimizing production stoppages due to failures. Try to get better prices by renegotiating with your suppliers on items such as rent, insurance, and transportation.
   In a high-interest rate environment, if possible, increase the use of equity and limit the financing cost by controlling borrowing. In case of exchange rate risk, try to balance export revenues with import input costs (natural ‘hedge’) or use financial ‘hedge’ instruments. Steps such as close monitoring of customer needs, accuracy in demand forecasting, and supply chain process efficiency can also lead to significant cost optimization.

Thanks to these steps, SMEs can manage their cost structure more transparently. Cost management in the cable industry should not overlook the importance of analyzing and managing costs correctly, as this not only protects financial health but also provides a roadmap for informed strategic decisions.
Financial efficiency for SMEs. This can be achieved by keeping each cost item under control separately and optimizing with a holistic approach.

Ultimately, understanding and effectively managing cost drivers in cable operations will make your company resilient to uncertain market conditions. In the next section, we will focus on digital solutions to take these cost management processes to the next level.
Especially ERP systems, we will continue our guide by examining how cost tracking and optimization can play a critical role in the cable industry. Once you have ensured transparency of the cost structure, you will see how you can increase efficiency by leveraging technology.

3. Achieving Financial Efficiency by Utilizing ERP Systems

For SMEs that manufacture cables, financial efficiency is one of the main ways to maintain competitiveness and increase profitability. In order to achieve this goal, integratedERP systemsProcess optimization withplays a critical role.

ERP (Enterprise Resource Planning) software improves processes by combining workflows in different departments, such as production, inventory, sales, and accounting, on a single digital platform. Thus, businesses eliminate inefficiencies caused by manual and disconnected systems. Cost management in the cable industry can achieve significant gains in the field.

Process Efficiency and Integration with ERP

The use of ERP in the cable industry provides end-to-end process integration, making all steps from production to supply more transparent and controllable. For example, accurate length management and consumable tracking in cable production can be planned more easily thanks to special modules within the ERP.

Suitable for the need, production planning benefits such as increasing stock turnover and reducing waste rate can be achieved. An ERP solution for the cable industry minimizes the amount of scrap cable and machine setting changes by ensuring that the correct quantity is produced according to the order, and the winding/cutting processes are optimally planned.

This type of ERP usage in cable companies ensures that all operational data flows consistently and increases coordination between departments. As a result, disruptions on the production line are reduced and overall efficiency is increased.

Budget Control and Stock Optimization with Real-Time Data

One of the biggest advantages of ERP systems is real-time data. Thanks to the finance and accounting modules, managers can monitor budget realizations instantly and detect deviations early.

ERP solutions are widely used by SMEs in Turkey. Real-time financial reporting provides instant access to key indicators such as profit margin, inventory turnover, and sales performance. In this way, business owners and financial affairs managers can make informed decisions based on up-to-date data.

Stock optimization also improves significantly with ERP. The inventory module makes it easy to maintain optimum stock levels by continuously monitoring raw material and finished product stocks. Real-time stock tracking shows what is available and how much of it is available, as well as predicting which product will be needed and when.

For example, a business using integrated ERP has minimized the risk of excess or insufficient stock, thus preventing production interruptions and reducing unnecessary stock costs by up to 25%. In addition, ERP’s automatic order planning feature synchronizes production and supply according to sales forecasts, enabling just-in-time production, which contributes to production. This reduces storage costs and helps meet customer orders on time and completely.

The main financial efficiency advantages provided by ERP:

• Instant budget control and reporting: Since all expense and income items are collected in a single system, managers can monitor their budgets from moment to moment. This holistic view can be used to make adjustments in specific areas when necessary cost reduction or to reallocate resources efficiently.
• Optimized stock and supply management:ERP software works with automatic reorder points and supplier integration. In this way, the required materials are supplied on time, and excess stock is not kept. Integration and communication with suppliers shortens delivery times and makes supply chain management up to 30% more effective.
• Improvement in order and production planning:Sales orders are reflected in the production plan in real time within the ERP. The production line is prioritized according to incoming demand and capacity planning is done.
  This automation reduces order fulfillment time and increases customer satisfaction. Thanks to the integration, orders are processed without errors, shipments are accelerated, and customer requests are responded to immediately.
• Data-driven decision making and forecasting:ERP systems offer comprehensive analysis and reporting tools. Companies can easily access profitability analysis, product-based cost calculations and performance indicators.
  For example, when all costs are monitored on a single platform thanks to an ERP, savings opportunities become clear and the most profitable products can be identified and pricing strategies can be shaped accordingly. Real-time reports and dashboards also allow managers to make fast and accurate decisions.

Resilience and Foresight in Uncertain Times

For businesses in times of uncertainty, such as inflation, pandemic, exchange rate fluctuations, durability and foresight are vital. ERP systems allow companies to maintain control even in these challenging conditions. For example, the impact of sudden changes in exchange rates on the cost structure can be quickly modeled with financial analysis tools within ERP.

Teams using an integrated ERP platform can respond quickly to market changes by automating manual processes and instantly sharing reliable data, thus gaining a competitive advantage while keeping costs under control. In unforeseen crises such as pandemics, the central data system provided by ERP provides convenience in remote working and digital job tracking.

With cloud-based modern ERP solutions, managers can monitor production, sales and financial status even when they are outside the factory. Real-time can monitor and intervene. In addition, forecasting and scenario analysis tools within ERP systems allow for the simulation of different scenarios for situations such as inflation or demand contraction. In this way, SMEs can make proactive plans against possible risks. Financial efficiency for SMEs. They can continue on their way without deviating from their goals.

ERP systems also act as a buffer against supply chain disruptions during uncertain times. For example, fluctuations in raw material prices or supply delays become more manageable with the supplier performance tracking and alternative resource management features provided by ERP.

These digitalized processes not only provide businesses with resilience to crises, but also offer the opportunity to turn crises into opportunities. In short, a strong ERP infrastructure increases the resilience of the company by allowing flexible and rapid action in uncertainties, and also provides forward-looking foresight ability that supports strategic decisions by developing.

ERP Solutions for SMEs in Turkey: Local and Foreign ERP Manufacturers

The rate of ERP usage is increasing among cable manufacturing SMEs in Turkey. The main reason for this is that local ERP software offers solutions that are suitable for the needs of SMEs and are cost-effective. Local ERP providers, in particular, are among the ideal options for SMEs with their structures customized according to Turkey’s tax legislation and business practices.

Local solutions provide great ease of installation and use by offering advantages such as e-invoice, e-ledger compatibility, Turkish language support, and compliance with local accounting standards.

In addition, these software offer licensing models (such as subscription, cloud usage, modular purchasing) that fit the budgets of SME-scale companies. Financial efficiency for SMEs contributes to the goal.

In addition to local ERPs, some medium and large-scale cable manufacturers can also use global ERP systems. Global ERP solutions are especially preferred by companies operating internationally or with foreign partners.

These systems include globally accepted best practices while also offering localization (e.g. regulatory compliance) support for the Turkish market.

In general, in Turkey, ERP usage in cable companies, when it comes to software, businesses evaluate both domestic and foreign software according to their size, budget, and needs. What is important is that the selected ERP solution includes modules suitable for the production sector and adapts to company processes (such as features such as material requirement planning, production recipes, batch/lot tracking).

Case Study: A Medium-Sized Cable Company Gaining Cost Advantage with ERP

In order to demonstrate the tangible benefits of ERP systems, it would be useful to look at the real-life experience of a medium-sized cable manufacturer. A medium-sized company in the Antalya Free Zone that produces and exports cables focused on the automotive sector has made significant improvements in its operations by updating its old ERP system and switching to a different solution. Thanks to ERP integration, the company has brought all its processes from production to finance under one roof and accelerated its reporting processes.

The results are quite striking: The time required for many processes, such as preparing sales reports, order tracking, and payment lists, has decreased by up to 20%. Data that was previously entered repeatedly in different systems can now be entered at once with ERP and used by every department. Data consistencyensured and human errors are minimized.

Accounting records and costing processes have been automated, allowing financial closing and financial analyses to be completed in a much shorter time and without errors.

During this ERP transformation, the company also implemented some modules specific to its existing system. For example, it reported that it significantly reduced its workload by managing customs and logistics transactions via ERP thanks to a special add-on that complies with Free Zone legislation. The creation of a common data pool for all business units made it easier for managers to make realistic predictions.

Company officials emphasized the success of the project by saying, “We have gained time savings and efficiency in every process from month-end closing processes to cost tracking” with the transition to ERP. This case study shows that a cable manufacturer can both gain operational efficiency and reduce costs thanks to the ERP investment, and also achieve greater growth. Predictable shows that it can reach a management structure.

The use of ERP has become an indispensable part of cost management strategies in the cable industry. With its integrated structure and ability to provide real-time data, ERP helps SMEs remain competitive and achieve financial sustainability. In the next section, internal auditing and control of hidden costs, we will discuss strategies that will enable cable manufacturers to further strengthen their financial structures.

4. Internal Audit: Identifying and Eliminating Hidden Costs

For SMEs that manufacture cables, internal audit is not just a requirement to verify accounting records, but rather cost management in the cable industry. It is a highly strategic tool.

Especially raw materials like copper. Approximate total product cost of items 70%. In cable production, which is the leading industry, waste and inefficiencies can quickly erode profit margins. A well-planned internal audit system examines internal processes and controls with an impartial eye, uncovering hidden cost elements and providing opportunities for improvement.

Ultimately, the goal is to maximize efficiency for every expenditure and minimize waste.

Strategic Importance and Scope of Internal Audit

The main reason why internal auditing has strategic importance in the cable industry is that the company is reducing hidden costs. The cable production process is multi-step and even small disruptions that may occur at each step can turn into large cost burdens over time.

Cost control with internal audit, ensuring that these disruptions are detected early, and that precautions can be taken. Indeed, internal audit units provide objective insights to company management by revealing unnecessary expenses, inefficient practices and potential errors through regular checks.

For example, thanks to a strong internal audit, a cable manufacturer was able to scrutinise its supply chain, identify inefficiencies in inventory management, reorganise supplier contracts and reduce purchasing costs by 15% in just six months. This example demonstrates that internal auditing, when implemented effectively, can have a direct and positive impact on financial results.

Financial, production, and operational internal audit dimensions: Internal audit covers a wide scope and evaluates company activities in different dimensions:

• Financial Audit:It ensures the accuracy of the company’s financial records and budget control. In this way, deviations in cost items are detected early, and money leaks caused by fraud or errors are prevented. Financial internal auditing protects the company’s cash flow by reporting anomalies, such as higher-than-expected energy costs or overtime expenses.
• Production Control:Analyzes the effectiveness and efficiency of production processes in the factory area. In internal production auditing, production efficiency analysis, machine utilization rates, downtimes, and waste rates. The goal is to identify bottlenecks in processes, high error rates, or low output, and improve them. For example, if the amount of scrap (waste) generated on a production line is unusually high, internal auditing will detect this and investigate the root cause.
• Operational Audit:Evaluates the company’s overall operation and resource usage. Operational audit for SMEs It checks how efficiently processes operate in areas such as supply chain management, inventory control, logistics and human resources.
  The aim in this dimension is to improve the holistic performance of the business by preventing operational disruptions (e.g. idle stock, unnecessary procedures, low labor efficiency).

Uncovering Hidden Costs

Scrap materials resulting from cable production may create a hidden cost burden in the company budget if not systematically monitored.One of the most critical contributions of internal auditing is that it can be overlooked in daily operations. hidden costs is to bring it to light.
These hidden costs are often seen as small parts losses or inefficiencies, but over time they can add up to large financial impacts. The main sources of hidden costs are:

• Waste (Scrap) Rates:The waste rate indicates how much of the material used in production turns into waste. A high waste rate indicates that raw materials are being wasted and that improvements are needed in the production process.
  
  For example, if the amount of scrap copper and plastic generated during cable cutting or coating processes is not measured regularly, the cost of this waste may not be noticed. However, reducing the waste rate means direct cost savings; in fact, a low waste rate indicates that the quality and efficiency in the production process is high.
  
  By comparing scrap rates across different shifts or machines, internal auditing can detect anomalies and recommend measures to reduce waste (e.g. operator training, machine calibration).
• Idle Stock and Excess Inventory: Stocks of raw materials or products remaining stationary in the warehouse for long periods of time are another hidden cost that ties up working capital. Idle stock not only takes up storage space, but also runs the risk of deteriorating, becoming obsolete, or becoming worthless.
  
  Lean management principles, as the waiting time between production and shipment increases, idle inventory creates additional costs by locking up working capital. Internal auditing can review inventory records and report on slow-moving or never-used materials, suggesting strategies to management to deplete or reuse these stocks.
• Low Productivity and Inefficiencies: Often, businesses cannot fully measure the efficiency losses in their processes, and this returns as hidden costs. For example, energy consumption may increase due to machine settings not being optimized, or there may be duplicate labor doing the same job twice.
  
  Internal audit teams observe production lines and workflows, production efficiency, and identify obstacles in the way. If a machine breaks down frequently and stops production, this can lead to missed production targets and delivery delays (which means customer dissatisfaction and potential lost sales).
  
  Similarly, outdated practices such as a process taking longer than necessary or using paper-based tracking instead of digital can keep the workforce busy and reduce productivity. Internal audit reports these types of inefficiencies to the company. Reducing hidden costs provides concrete opportunities for.

In summary, internal audit works like a projector within the business. Overlooked cost sheds light on the elements. Once the leakage points are identified, it is possible to improve them. It should not be forgotten that the principle of “you can’t control what you can’t measure” applies; therefore, in order to control waste and inefficiencies, it is necessary to first measure and analyze, and then the necessary actions must be taken.

How is the Internal Audit Process Conducted?

In order for internal auditing to be successful, a systematic and planned approach must be followed. In general, an internal audit process consists of the following steps:

1. Planning: This is the stage where the target and scope of the audit are defined. In this step, the areas and criteria to be audited are determined; for example, it is decided whether the focus will be on cost reduction opportunities in the production line or on financial record consistency. The audit team creates annual/quarterly audit plans by prioritizing the risky or high-cost potential areas of the company.
   
   In planning, the timing of the audit, the responsible persons, and the methods to be used (observation, document review, data analysis, etc.) are also clarified.
2. Application (Field Work): At this stage, the auditors start collecting data and examining the processes in line with the plan. Observations are made at the production site, personnel are interviewed, and documents such as machine records and inventory reports are examined. Sampling control tests are performed; for example, production reports for a certain period are compared and checked for inconsistencies.
   
   Data analysis tools are also used to detect anomalies that cannot be noticed manually. At this stage, the findings obtained are carefully noted, and evidence (photograph, document copy, measurement results) is recorded.
3. Analysis and Evaluation:Root cause analysis of the findings is performed in light of the data collected from the field study. The audit team compares the current situation with the standards or targets determined; tries to understand where the deviations originate from.
   
   For example, why the waste rate is higher in a line than in other lines or why a certain raw material consumption exceeds the industry average is analyzed. As a result of these evaluations, improvement suggestions are developed. Each finding is prioritized in terms of potential savings or improvement impact.
4. Reporting:The findings and recommendations obtained at the end of the audit are presented to the senior management in writing. During the reporting phase, the problems identified during the audit, their possible financial impacts and solution suggestions are expressed in clear language.
   
   For example, the report includes findings and suggestions such as “The waste rate in line X is above average at 5%, the reason for this is the incorrectly adjusted machine cutting length; with the correct setting, approximately Y TL annual savings are possible.” The draft report is first shared with the relevant unit managers and their opinions are received, then finalized and presented to senior management. This report is a roadmap for future actions.

Sample KPIs for Cost Management

During and after internal audits, the company’s performance is followed up with quantitative data on Key Performance Indicators (KPIs), which numerically reveal areas where developments have been made or problems have been experienced. In the cable industry cost control with internal audit Here are some examples of KPIs that can be used:

• Waste Rate (%): This indicates the ratio of materials used in production to the amount of scrap generated. A low waste rate indicates high production efficiency. This KPI is critical for tracking raw material waste. For example, a decrease in the waste rate indicates that material usage is optimized, and reducing hidden costs indicates that progress is being made in this direction.
• Production Efficiency:It is an indicator that measures the production performance of the factory. It can be expressed in various ways – for example Overall Equipment Effectiveness (OEE) The value gives as a percentage how efficiently the production line operates in terms of time, speed and quality.  Alsoright production rate first time(percentage of products produced without defects the first time) is also an important metric for production efficiency. High production efficiency indicates that more output is obtained with the same resources and that processes are efficient.
• Production Quantity per Energy: It measures the number of products produced or the production value per unit of energy consumed (e.g. kWh). This KPI is an indicator of energy efficiency. Since cable manufacturing can be an energy-intensive process, when improvements are made,energy cost per unit Internal audits can improve this metric through actions such as identifying and replacing old or inefficient machinery or optimizing operating hours.
• On-time Delivery Rate (%):It shows the percentage of orders shipped to the customer on the promised date. This indicator, which reflects operational efficiency and supply-planning success, indirectly affects costs because extra costs such as express shipping, excess stock or penalties may arise when on-time delivery is not made.
  Internal auditing examines the process from order to delivery and identifies factors that cause delays (e.g. errors in the production plan or supply delays) and thus contributes to improving this ratio.

The above KPIs help clarify the company’s areas of improvement by correlating internal audit findings with numerical targets. Monitoring these indicators every quarter will also reveal the effectiveness of the actions taken.

Quarterly Audit Checklist

For cable manufacturing SMEs, there are some critical areas that need to be reviewed regularly every quarter. The following practical audit checklist allows for systematic checking of these key areas:

• Inventory and Stock Level: Raw material, semi-finished, and finished product stocks are reviewed to identify products that are slow-moving or at risk of being out of stock. Stock turnover rates and optimum stock levels are checked. Obsolete materials or unused consumables are identified to prevent idle stock formation.
• Production Losses and Waste Analysis: The waste rates in the production processes are examined by compiling from production reports and field observations. It is checked whether there is an unusual increase in scrap in certain products or departments. The reasons for the waste (machine setting, operator error, material quality, etc.) are discussed and an in-depth root cause analysis is planned if necessary.
• Machine Maintenance and Malfunction Records:Maintenance plans and failure/stop records of all critical production equipment are reviewed. Compliance with planned maintenance frequency and the status of machines that frequently fail are evaluated. Whether unexpected failures cause disruptions in production and their costs are calculated. If necessary, measures such as equipment renewal or additional spare parts stocking are recommended.
• Quality Control and Returns:Internal quality control reports and customer returns are reviewed to monitor production quality. High defect rates or customer complaint trends are checked for specific product groups. Since quality issues can lead to both direct remanufacturing costs and indirect customer loss, these findings are handled meticulously.
• Energy and Raw Material Consumption:The factory’s energy consumption data, such as electricity and gas, are analyzed in relation to production quantities. If energy use per unit product has increased, the reasons are investigated. Similarly, the usage rates of main raw materials (copper, PVC, etc.) for a certain production volume are examined; if there are deviations outside the norm, the recording and measurement systems are verified.
• Order and Delivery Performance: The on-time fulfillment rate of orders received during the quarter and the reasons for delays, if any, are reported. Factors such as the accuracy of production planning, the timely provision of materials by suppliers, andthe  adequacy of finished product stocks are examined. The on-time shipping rate is evaluated according to the targets.
• Financial Indicators: Budget realizations are checked; it is determined whether there is any deviation compared to the budget, especially in items such as production costs, energy expenses, maintenance and repair expenses. The reasons for the deviations (e.g. raw material price increase, unexpected machine failure) are noted and preventive action plans are suggested for the next period.

This checklist is repeated within the company each quarter. Continuous improvement will create a cycle. Thanks to regular inspections, small deviations are caught early and corrected before they become bigger; thus, the possibility of encountering big surprises at the end of the year is reduced.

Turning Internal Audit Findings into Action

The step that reveals the true value of internal auditing is the transformation of audit findings into tangible improvements. After the audit report is submitted, the company management and relevant departments should come together and create an action plan.

First, the findings are ranked according to their importance and urgency. Then, responsible persons are assigned for each finding and the target time for corrective action is defined.

For example, in the audit, a high loss rate is detected, a team led by the production manager determines actions such as training, process improvement, or equipment calibration to reduce this rate. Similarly, purchasing and warehouse teams can work together to produce solutions such as melting excess stock or updating production plans against the idle stock problem.

In the process of turning findings into action, monitoring and feedback are very critical. Every action taken should be monitored periodically: Are the relevant KPI values ​​improving? Is the problem recurring or has it been permanently resolved? Internal auditors or assigned quality teams periodically check the status of these actions.

If necessary, additional corrective steps are taken or the strategy is updated. In this way, internal auditing is no longer a one-time activity; it becomes an established part of the company culture. Continuous improvement becomes a mechanism.

Finally, it is important to integrate the insights gained from internal auditing into the company’s strategy. Top management should use audit reports not only at the operational level but also as input into the strategic planning process. In this way, both daily cost control is ensured and long-term decisions are made more soundly.

The internal control environment strengthened by internal audit also makes the company more resilient against external shocks and unexpected risks. As a matter of fact, as we will discuss in the next section, risk management strategies will protect your company against unforeseen financial risks by feeding on internal audit findings.

5. Enterprise Risk Management: Reducing Financial and Operational Risks

Cost management in the cable industry, is not limited to improving internal processes; being prepared for external uncertainties is also an important part of this process. Factors such as exchange rate fluctuations, interruptions in raw material supply, sudden increases in energy prices or regulatory changes can directly affect the company’s budget and profitability.

That’s why every cable manufacturer, especially SMEs, requires a structure that can predict risks and manage them systematically. The name of this structure is: Enterprise Risk Management (ERM).

Main Risks Encountered in the Cable Industry

For cable manufacturers, risk does not only mean natural disasters or major crises. Even in daily operations, many types of risks are encountered, such as:

• Financial Risks: Factors such as exchange rate volatility, interest rate increases, customer maturity extensions or collection delays can disrupt cash flow. Since raw materials such as copper and aluminum, which are frequently used in cable production, are priced in foreign currency, any fluctuation in the exchange rate is directly reflected in production costs.
• Supply Chain Risks: A delay or disruption in the main material supplier can disrupt production continuity. Relying on a single supplier is a major risk factor, especially in times of crisis.
• Operational Risks: Situations such as machine breakdowns, increased production errors, human error or low production efficiency increase costs and negatively affect on-time delivery capability.
• Regulation and Compliance Risks:Electrical and cable products are subject to certain technical standards and environmental regulations. In case of non-compliance, the product may be withdrawn from the market, penal sanctions or damage to brand reputation may be possible.
• Cyber ​​Risks:Cyberattacks on ERP systems or digital supply networks can lead to data loss or business interruption.

The common feature of all these risks is that their effects are mostly Cost management in the cable industry. For example, a disruption in a single supplier may result in the necessity to purchase expensive materials from another source, which narrows the profit margin.

A Workable Risk Management Framework for SMEs

In order for small and medium-sized companies to manage risks, it is sufficient to adopt a simple but effective system instead of complex models. Below is a basic four-step enterprise risk management process includes:

1. Identifying Risks: Clearly list financial, operational, supply or compliance risks specific to your company’s activities.
2. Evaluation and Classification: Rank each risk according to its probability and impact according to a “priority matrix.” For example, if currency volatility is both highly probable and highly impactful, it requires immediate management.
3. Creating an Action Plan: Define measures such as scenario analysis, insurance, alternative supply plan, fixed price contract for priority risks.
4. Monitoring and Update:Review your risk plan regularly and update actions when necessary.

Practical Tools and Applicable Measures

Some concrete risk reduction methods that can be applied at the SME level:

• Fixed Price Agreements: To protect against exchange rate and market fluctuations by making long-term price fixing agreements with raw material suppliers.
• Alternative Supplier List: Having a second or even third alternative supplier for main materials ensures uninterrupted supply in times of crisis.
• Scenario Analysis: Preparations can be made with scenarios such as “What happens if the exchange rate increases by 30%?” or “How much will production be affected if supplier X cannot deliver?”
• Business Continuity Plan (BCP): Defining backup plans for situations such as machine failure, ERP crash, power outage.
• Extending Insurance Coverage: Review of guarantees against situations such as production stoppage, transportation loss, fire.
• ERP Based Warning Systems: Creating automatic warning definitions within the system for risky deviations, stock levels, and excessive expense increases.

Integrating Internal Audit Findings into Risk Management

In the previous section, we touched on the importance of internal auditing in cost savings. The same internal audit processes are also a powerful source of information for risk management. For example, a production line with a high waste rate is not only an efficiency problem, but alsofinancial riskIt is a region that carries.

Integrating audit findings into risk management plans ensures that resources are directed to the right areas.

Example:

• Internal audit finding: Copper wastage increased from 4% to 7%.
• Financial impact: Monthly raw material cost +₺35,000
• Risk category: Operational / Financial
• Action: Process training, machine calibration, and a waste tracking chart should be implemented again.

Every integration done in this way,Cost management in the cable industryIt not only reduces risks within the framework of the company but also makes the company more predictable.

Risk Culture and Strategic Alignment

Effective risk management is not only about procedures, but also about a process that is embraced by all employees of the company.risk awareness culture” is possible. SME managers:

• Risks should be evaluated not only in times of crisis but also in daily decision-making processes.
• Employees should be given risk awareness training and should heed risk signals coming from the field.
• Must integrate risk management into the company’s strategic planning.

Remember: Knowing the risks is the first step to avoiding them.

In the next section, we will discuss a key area that supports these risk management approaches: sectoral regulations and legal compliance. Full compliance with legislation by cable manufacturers is a critical strategy to both reduce risks and keep costs under control in the long term.

6. Attention to Compliance and Regulations: Legal Requirements in the Cable Industry

Cost management in the cable industry cannot be sustainable without legal compliance. For small and medium-sized cable manufacturers (SMEs), Regulation and compliance in the cable industry are critical to both competing in the market and avoiding unexpected penalties and costs.

In this section, the main technical issues that concern SMEs engaged in cable production are presented. Legal regulations, EU harmonization processes (such as RoHS, REACH) and the risks that non-compliance may cause. We will also cover compliance monitoring with digital tools and a practical compatibility checklist by presenting, Reducing legal risks for SMEs and we will contribute to the improvement of cost management.

Basic Regulations Concerning Cable Manufacturers in Turkey

Cable manufacturers must comply with both national and international standards and regulations. In TurkeyTurkish Standards Institution (TSE)determined byTS/EN standardsdefines the minimum requirements for cable quality. For example, TS EN 60228 standard properties of cable conductors. While determining, TS EN 50575 European Norms (EN) such as these cover critical issues such as reaction to fire performance.

Cable Industrialists Association (Kabloder) is also in the sector TSE to prevent the production of poor quality goods and encourages the implementation of standards by cooperating with relevant official institutions. In this way, the products of domestic manufacturers become compliant with the technical requirements both in the domestic and export markets.

CE certificate for cable production. It is a legal requirement in the field. In order to be put into circulation in the European Union, the cables must be covered by the appropriate directives.CE mark. In particular, electrical cables between 50 Volts and 1000 Volts AC are subject to the EU Low Voltage Directive (2014/35/EU). A cable bearing the CE mark meets all relevant health and safety requirements, documented and presented to the market.

These requirements include restrictions on harmful substances (e.g. RoHS– Restriction of Hazardous Substances Directive) and electrical safety tests are included. In addition, within the scope of CE compliance, the manufacturer shall provide a Technical Fileshould prepare and EU Declaration of Conformity Technical file; design drawings, material lists, test reports and includes documents such as risk assessment.

This file must prove that the product complies with the legislation and must be presented when requested by the competent authorities.

In national legislation, Law No. 4703 and relatedMarket Surveillance and Control Regulationfor products found to be unsafe or contrary to technical regulations, in accordance withadministrative sanctionsAs a result of market inspections by the Ministry of Industry and Technology, decisions can be made to recall cables that pose a security risk.

For example, some power cable products that were found to be non-standard were recalled from the market in 2023 due to “risk of electric shock and fire.” Such cases show that compliance is not just a requirement on paper, protecting user life and property safety indicates that it is a vital issue.

EU Harmonization Processes: RoHS and REACH Compliance

Among the important environmental regulations that cable manufacturers must comply with areRoHS ve REACHis located.RoHS (Restriction of Hazardous Substances)is an EU directive restricting the use of certain harmful substances in electrical and electronic equipment. In force since 2013, RoHS prohibits the presence of heavy metals such as lead, mercury, cadmium, PBB, PBDE, brominated flame retardants and some phthalates in cables above certain limits.

All cables sold in Europe must meet RoHS criteria and companies are required to comply if non-compliance is detected.heavy fines applicable. Similar restrictions apply in Turkey and local legislation has been aligned with EU standards. Therefore, manufacturers operating in both the domestic market and exports RoHS today must be meticulous about this matter.

REACH(Registration, Evaluation, Authorisation and Restriction of Chemicals) is a comprehensive EU regulation on the registration and restriction of chemicals. The cable industry falls within the definition of “product” (object containing a substance) under REACH and is particularly liable for chemicals used in cable insulation.

For example, some types of phthalates that provide flexibility in PVC-based cables have been phased out over time because they are on REACH’s SVHC (Substances of Very High Concern) list. This process has required cable manufacturers to work closely with their raw material suppliers to find alternatives to harmful chemicals.

To comply with REACH, manufacturers must maintain strong supply chain communication and regularly monitor new restrictions. Otherwise, a customer request or customs inspection may prevent the product from entering the EU; even the batch sent may be blocked. Quarantined at customs can cause serious time and financial loss to the company. In short, RoHS and REACH compliance, is an essential condition for accessing the EU market and if proactive action is not taken, it is inevitable to encounter costly obstacles.

Costs and Risks That May Arise in Case of Non-Compliance

The costs of non-compliance with legal requirements can be very high for SMEs. First of all, detected non-compliance can lead to administrative fines. For example, in the EU, for RoHS violations serious fines is in question and similar sanctions are also applied in Turkey.

In addition, the withdrawal of a non-standard or unsafe cable product from the market is a direct cost for the company:recall and destruction processes, the necessity of producing new products instead and logistics costs quickly negatively affect the bottom line. The company’s name being included in unsafe product lists published as a result of official inspections can cause irreparable damage to the brand’s reputation.

For example, the Unsafe Product Information System operated by the Ministry (GÜBIS) announces the products that fail the inspection by making them accessible to everyone. The inclusion of a cable product on this platform may shake the trust of customers and lead to future sales losses.

Another cost of non-compliance is legal risk. If users are harmed by a technical defect (e.g. fire or electric shock), the manufacturer may face compensation claims. Some large corporate customers even require their suppliers to have certain certifications and proof of testing; failure to comply can result in contract cancellation or loss of customers.

In short, while remaining indifferent to regulations may seem like avoiding costs in the short term, it is not good in the long term. Much higher costs, reputational damage and legal sanctions It returns as.

Relationship of Compliance Processes with Cost Management

Although legal compliance processes are seen as an expense item in the cable industry, they are actually an effective risk management and cost control tool. Activities such as selecting raw materials in accordance with standards, regular testing and certification may initially incur additional costs; however, they can prevent losses due to penal sanctions or product errors that may arise in the future. reduces total costs. 

For example, testing a cable for compliance with the standard before production may require a certain fee, but thanks to this test, it is possible to avoid launching a non-standard product on the market and then recall you avoid doing it – the cost of which can be many times greater than the cost of testing.

Investing in compliance also provides operational efficiency. In businesses that operate in accordance with established procedures (e.g. ISO 9001 quality management system), the error rate decreases, and the need for waste and remanufacturing decreases. This creates a cost advantage by preventing material and labor waste.

Cost management in the cable industryCompliance with regulations in your strategies is like insurance: You may not notice its benefits every day, but it protects your business in times of crisis. Moreover, working in compliance increases your company’s reputation, providing a competitive advantage when entering new markets or gaining customers. International customers in particular, CE mark, test reports and compliance with environmental legislation are required as a prerequisite.

Companies that meet these requirements from the outset stand out at the bidding stage and can win more business. Ultimately, regulatory compliance and cost management are mutually reinforcing: Compliance strengthens financial stability by preventing unexpected costs.

Digital Compliance and Documentation Management

Today, digital technologies have become the greatest aid for SMEs in achieving and maintaining legal compliance. Digital compliance systems and documentation tools, legislative tracking, and document management become much easier. For example, document management system (DMS)or cloud-based archive, all your standard documents, test certificates, and your CE documents and allows you to regularly store and update your technical files.

In this way, you can quickly submit the necessary documents in case of an audit and respond immediately when your customers request technical information.

You can also follow the changes in legislation by subscribing to online platforms and e-mail newsletters.You can be informed about regulation updates. For example, a change in EU directives or a revision in TSE standards in Turkey may affect your production processes, so being informed early reduces the cost of compliance. Another digital solution, compliance checklistsis transferred to electronic media.

With every new product development or production batch, via digital checklist product label, test reports, technical file Items such as can be checked by marking them one by one. This reduces the risk of human error and increases standardization.

For some SMEs, simple spreadsheets or project management tools may be sufficient instead of expensive compliance software. The important thing is to establish a system that is appropriate for the size of your company and make compliance steps a part of the daily workflow. It should not be forgotten that digital systems not only keep records but alsoTraceabilityIt also makes it easier to provide. An ERP/MRP software that records every stage of production and the materials used allows you to quickly get to the source of the problem in case of a possible nonconformity.

So instead of a large-scale recall, you can isolate and fix only the affected batches. In short, digitalization is a way of reducing the margin of error. It is a tool that increases efficiency and reaction speed.

Practical Compliance Checklist for Cable Manufacturers

To ensure legal and technical compliance, the key points that SMEs should review for each product and production batch are as follows:

• Product Labels and Markings: Suitable on cable labeling Make sure that the CE marking, voltage/temperature ratings, standard numbers (e.g.TS ENstandard code) and warning symbols, if necessary, must be complete. Ensure traceability by including the manufacturer or importer company information on the product label. Especially CE certificate cable production It is an essential marking for the product and must be placed visibly on the packaging.
• Test Reports and Certificates: Current proof of product compliance with relevant TSE/EN standards test reports Keep these in your files. Reports of critical tests such as flame retardancy, insulation resistance, conductor cross-section, etc. obtained from accredited laboratories are important for both legal compliance and customer confidence.
  If possible, try to obtain a TSE certificate of conformity or international certificates (such as VDE, UL) for your products; these documents provide quality assurance.
• Technical File and Documentation: Prepare a technical file for each product and keep it up to date. This file includes the product’s technical drawings, material composition, applied standards, declaration of conformity(Declaration of Conformity) document and all test reports.
  The technical dossier forms the basis for the CE marking and market surveillance It is one of the first documents to be requested during inspections. Also, keep the work instructions and control forms regarding the production process as part of the file.
• Traceability Records:Make every stage of production traceable. Keep certificates from suppliers for the raw materials you use (e.g. batch number and certificate of conformity for copper conductors or PVC granulate).
  Label the cables produced with a batch number or serial number and record which materials are used in which batch. In this way, any in detecting non-conformity You can identify problematic batches and limit recalls. Traceability also allows you to take quick action in case of quality complaints from your customers.
• RoHS & REACH Control: Keep your products and components up to date RoHS and REACH compliance Regularly verify that materials meet the criteria. Check with your suppliers declaration that it does not contain harmful substancesand have chemical analysis performed on critical components if necessary.
  Make sure that substances such as lead, cadmium or banned phthalates are not used, especially in cable insulation and sheathing materials. Perform these checks at least once a year or whenever a supplier is changed.
• Internal Audits and Training: In-house compliance audits Review your production lines and documentation periodically to check for any deviations or omissions.
  Provide training to your employees, especially quality control and production teams, on relevant regulations and standards. This spreads responsibility for compliance throughout the organization and helps prevent potential errors.

The above checklist roughly summarises the items that need to be complied with. Additional items may be added depending on the product range and field of activity of each SME (e.g.WEEE – Waste Electrical Equipment regulation, such as recycling labels or private sector standards) may need to be added. The important thing is to continue production with a systematic approach without skipping any critical steps.

In conclusion, full compliance with regulations is not a burden for cable manufacturers, but a long-term investment. The compliance strategies we discuss in this section will help protect your company from legal risks and increase operational efficiency.In the next section, supply chain optimization We will focus on how we can further improve cost management in the cable industry.

Once you have a harmonious and efficient production structure, it is time to tackle the optimization steps in the chain from raw material supply to distribution. So, in the last part of our guide,cost advantageWe will examine what we can do in the supply chain to ensure this.

7. Optimizing Supply Chain and Inventory Management

For SMEs that manufacture cables supply chain optimization and effective stock management, Cost management in the cable industry It is an indispensable part of their strategies. In particular, fluctuations in raw material prices, logistics costs and imported input dependency create serious cost pressures in supply chain processes.

In this section, we will discuss methods to reduce production costs by improving the end-to-end supply chain.

Cost pressures from raw materials and logistics:Copper, the main input for cable manufacturing, is vulnerable to fluctuations in global commodity markets. Recent reports predict sharp increases in copper prices in the coming period due to low stock levels and increasing demand; analysts predict that copper could reach $10,000 a tonne by 2024 and $10,000 by 2025. Price increases up to 75% can be seen. Cable manufacturers in Turkey are forced to import raw materials to a large extent. In fact, in 2018, the Turkish cable sector was approximately 75 thousand tons imported raw materials (approximately $910 million worth).

This means a cost pressure depending on exchange rate fluctuations and foreign markets. On the other hand, in recent years,freight (transportation) prices and energy costs have also increased logistics costs, increasing total production costs. In short, it is vital for cable manufacturers to adopt a cost-oriented approach in the supply chain, from raw material procurement to product delivery.

Warehouse management, stock levels and waste: Stock management for cable companies is one of the keys to efficiency and profitability. Keeping too much stock leaves working capital idle and increases storage costs. Conversely, insufficient stock can lead to disruptions in production and failure to meet customer demands.

In addition to achieving this balance, the quality of the material waiting in stock and the problems that arise during production Waste rates It also has an effect on cost. Effective control of materials used in cable production processes and error-free production minimize waste. For example, fewer problems in extrusion lines due to the use of quality raw materials and process improvements, less waste, more product and lower costs means.

Reducing waste rates and preventing material waste reduces the cost per unit of cable by directly reducing raw material costs. In addition, losses, damages and incorrect stock records in the warehouse also create hidden costs. Therefore, regular warehouse counts,FIFO Preventing materials from losing value due to waiting in the warehouse for a long time through methods such as (first in, first out) and effective stock tracking are of critical importance.

Digital stock tracking with automation: Nowadays Digital warehouse systems for SMEs, is a critical investment that provides cost advantage. Barcode labeling, RFID and WMS (Warehouse Management System)to instantly monitor stock entries and exits through software and ERP It has become possible to follow up integrated with systems. Such automation systems increase stock accuracy by minimizing human errors and enable more efficient use of the workforce.

For example, Wagner Kablo, a company operating in Turkey, implemented a barcode-supported WMS project to digitalize its warehouse and production processes, effective and person-independent stock management, traceability from raw material entry to shipment, customer satisfaction and performance increaseThanks to warehouse automation, order preparation and shipping errors have been reduced, and inventory holding costs have also been optimized.

Supply chain optimization Cable manufacturers, who can digitally monitor all steps from production to storage, achieve efficiency in their internal processes and gain a competitive advantage by responding to customer demands more quickly.

Supplier management and strategic agreements:Strategic management of supplier relationships is essential to controlling costs. As a first step, regularly evaluate your supplier portfolio for critical raw materials and components (supplier rating). Measure the price, quality, delivery times and consistency performance of suppliers and make sure to work with the most reliable and cost-effective business partners. Instead of relying on a single source multi-supply chain approach Adopting it would act as insurance against possible supply disruptions or price increases.

Finding alternative suppliers in different geographies and currencies can provide both better pricing options and ensure supply continuity. For example, some European-based manufacturers can gain cost advantages by diversifying their raw material purchases with suppliers in Asia. In addition, cost fixing with raw material contracts Going your way is a frequently used tactic in the cable industry.

Especially for price-volatile metals like copper 12-24 month fixed price agreements, enables production without being affected by inflation or market fluctuations. While large industrial companies make raw material costs predictable by using this method, SMEs can provide similar protection by making long-term agreements with their suppliers based on mutual benefit.

A win-win approach in supplier relations not only ensures cost advantage but also regular delivery and quality continuity.

Key KPIs to monitor: When improving supply chain and inventory processes, it is necessary to focus on a few key indicators to measure performance:

• Stock turnover rate:It shows how many times the stocks are renewed in a certain period. High stock turnover means more efficient stock usage and effective product replenishment. In the cable industry, this ratio can be used to measure the average waiting time of materials in the warehouse and cash flow efficiency.
• Service level (order fulfillment rate):It is the percentage of customer orders being met completely and on time. It can be thought of as the face of stock management reflected to the customer. High service level increases customer satisfaction while minimizing sales opportunity losses.
• Delivery time:It shows the total time from receiving an order to delivering it to the customer. The shorter and more consistent this time is, the more efficient the supply chain is. Focus on keeping your on-time delivery rate high, as compliance with customer deadlines is an indicator of a reliable supply chain.
• Supplier performance/consistency:The rate at which suppliers deliver materials on time and in the quality they promised is monitored with this KPI. For example, track what percentage of a supplier’s deliveries are on time and without problems. Working with consistent suppliers prevents disruptions in production and avoids extra costs arising from urgent market purchases.

Regular monitoring of these indicators will help you identify weak points in your supply chain early and take necessary corrective steps. Remember, you can’t manage what you don’t measure, so methods to reduce production costs Monitoring KPIs while implementing is essential for the sustainability of success.

Optimizing supply chain and inventory management in the cable industry provides significant advantages in terms of cost reduction. With these strategies, companies can both gain efficiency in their internal operations and reduce costs, while also providing a more reliable service to their customers.

In the next section, New Technologies and Automation Under the title, we will examine the methods by which cable manufacturers gain cost advantage through digital transformation and industry 4.0 applications.

8. New Technologies and Automation Applications

Cable manufacturing SMEs are struggling to survive under increasing competition and cost pressures.Cost management in the cable industryIn this context, it uses innovative methods in production processes.automation systems in cable productionand digitalization steps play a critical role. New technologies offer the potential to reduce costs while accelerating operations. In this section,Technologies that increase production efficiencyand the concrete gains they can provide will be discussed.

Featured Automation Technologies in Cable Production

Nowadaysdigital transformation in the cable industryrequires integrating a range of modern technology and software solutions into production lines. Below are some of the automation and digitalization applications that stand out to increase efficiency and quality and reduce costs in cable production:

• Extrusion automation:Automatic control of extrusion lines for cable insulation and sheathing production. Sensors and PLC-based controllers optimize line speeds and material flow, ensuring consistent cable thickness and quality. This minimizes human error, increases production speed, and reduces waste rates.
• Manufacturing Execution System (MES):Software systems that monitor and manage plant-wide production data in real time.WEsolutions manage production planning, quality control and maintenance processes in an integrated manner by collecting data from machines. For example, thanks to smart sensor alerts in MES, a reel full of cables can be detected early and prevented from going to waste. This reduces both material waste and prevents delivery delays.
• Smart sensors and IoT:Temperature, pressure, diameter, voltage etc. integrated into the machinessmart sensors, monitors production parameters instantly. This data is analyzed via IoT platforms to detect possible failures or quality deviations in advance. Automation systems based on sensor data can take instant corrective actions without the need for human intervention. This shortens downtime and prevents quality problems before they occur.
• Cloud-based ERP systems:ERP software, which brings together all business processes (order, stock, production, shipment, etc.) under one roof, has now become more accessible to SMEs via the cloud. Cloud ERP accelerates data flow between different departments of cable manufacturers and allows real-time cost and profit analysis.
  Especially for companies operating across multiple facilities or locations, cloud-based solutions offer scalability with low IT costs.
• Production planning and scheduling software:Planning tools that optimize every step of production, from raw material procurement to machine loading. These software create the most efficient production schedule by taking into account order delivery dates, machine maintenance times and operator shifts. As a result, machine idle time is reduced, unnecessary energy consumption is prevented and production capacity is fully utilized.

Return on Investment (ROI) and Measurable Benefits

Although investing in these technologies may seem costly at first,Technology investments for SMEsIt mostly provides a short return. For example, after a comprehensive MES installation, the return on investment can be realized in a short time of approximately 6 months,In 3 years, it will increase to 400%It has been reported that returns of up to .

Some data on the measurable gains provided by automation and digitalization steps are as follows:

• Labor efficiency and cost savings:Automated systems reduce the need for labor by performing repetitive tasks without errors. Companies experience significant reductions in labor costs in the long run. At the same time, overall production costs are reduced by monitoring and optimizing energy consumption.
• Quality and scrap rate:Real-time data monitoring allows immediate intervention in production errors. As a result, quality control processes are improved and scrap (waste) rates are reduced. With a well-implemented digital production system, overall equipment effectiveness (OEE) can increase by approximately 15% and production costs can be reduced by up to 10%. In addition, product quality is improved by 10-20% and rework requirements due to errors are reduced.
• Production speed and flexibility:Automation makes 24/7 uninterrupted production possible. Thanks to intelligent scheduling and IoT-supported control, production cycle times can be shortened by up to 45%. This means faster delivery to customers and greater adaptability to demand fluctuations.

These gains significantly increase the competitiveness of cable manufacturers. Indeed, automation systems increase efficiency, minimize errors, reduce labor costs, and increase production speed. Automation provides a great advantage, especially in environments where labor costs are high. Moreover, digital monitoring of production processes acts as insurance for businesses against uncertainties such as inflationary pressures and increases in energy costs. Thanks to energy efficiency-focused software, machines are operated at optimum levels, reducing the impact of rising energy prices.

Example Applications from Türkiye and the World

Successful examples of the benefits of digital technology investments in the cable sector are increasing. Gençler Kablo, an SME in Turkey, launched its ERP investment with the digitalization initiative it launched in 2020 and started to transform its factory on the path of “smart factory”.

They have made significant progress in the field of machine automation and real-time data flow by rapidly transferring many manual and inefficient processes to digital processes. With the contribution of this vision, the company’s turnover increased by 35% in 2021; Gençler Kablo continued its digitalization investments without slowing down during this period.

Cable manufacturers are also making big gains with similar transformations on a global scale. For example, Nexans Turkey’s Istanbul Tuzla factory ranked first among more than 90 facilities operating in 42 countries within the Nexans Group with its “Industry 4.0 and Digital Transformation” applications, and received the “At Digital Factory” award was deemed worthy.

The company has achieved this success by integrating advanced technologies and automation into its production processes and acting with the motto of being the leader of the digital age. This example underlines the concrete benefits of digital transformation in the cable industry and shows how the right technology investments make a difference in the sector.

In conclusion, new technology and automation applications are a powerful solution for SMEs in the cable sector, both against today’s cost pressures and the uncertainties of the future. In the next section, we will examine the successful implementation of these strategies by companiescase studiesBy examining the practical results of these approaches, we will see.

9. Cost Management in the Cable Industry

The cable manufacturing sector is an area where cost pressure is intense due to high raw material costs and energy use. Especially SME level manufacturers,Cost management in the cable industrymust maintain their competitive power by effectively implementing their strategies.

Below, in the sectorsuccessful cost reduction examplesThere are two case studies that presentProduction-oriented SME case studyIn these examples, companies have achieved significant gains by finding innovative solutions to the cost problems they faced.

Case Study 1: Cost Reduction through Energy Management (Major Cable Manufacturer, South Africa)

• Company:A major cable manufacturer operating in South Africa under the Powertech Group umbrella. This company offers a wide range of products for areas such as energy transmission, infrastructure, mining and construction.electrical cablesproducing.
• Cost Problem Encountered:Rising energy costs due to high energy consumption were putting significant pressure on the company. Increasing energy efficiency had become critical, especially since furnaces and machines in cable production facilities were constantly consuming energy.
• Applied Solution:The company has implemented an Energy Management System at its Port Elizabeth facility, in accordance with ISO 50001 standards. This includes measures such as weekend production shutdowns, the use of oven timers, demand controllers and the renewal of lighting in the facility with energy-efficient systems. This integrated energy management approach has enabled production to continue uninterrupted and prevent unnecessary energy consumption.
• Measurable Results:With the commissioning of the energy management system, energy consumption at the facility was reduced by approximately 10%. Thanks to the measures taken, the company1.5 million South African Rand (approximately $112,000)This reduction in energy costs increased the company’s operational profitability and ensured a quick return on investment.

Case Study 2: Operational Efficiency with Lean and ERP (Medium-Scale Cable Manufacturer, Türkiye)

• Company:A medium-sized company producing wire harnesses for the automotive industry in TurkeySME. This company, established in Antalya Free Zone, todayNearly 500 employeesIt is a company that exports more than 95% of its production and has an annual sales volume of approximately $25 million. 96% of its products are for the automotive sector, and parts produced by this company are used in one out of every 7 cars worldwide.
• Cost Pressure They Face:In the early years of its establishment, the company experienced limited growth due to regulatory uncertainties, logistics problems, and a lack of qualified labor. Over time, it focused on exports and grew, but was faced with the necessity of increasing operational efficiency and reducing costs in order to compete in the global market. Inefficiencies, waste (waste/rate), and fluctuating exchange rates and increasing input costs, particularly due to manual processes, threatened the company’s profit margins.
• The Solution They Implemented:In 2007, the company made radical improvements in cost management.lean production philosophyThe company implemented Toyota’s 5S principles as 6S (with occupational health and safety added) in the factory, aiming to reduce waste and speed up processes.
  
  As part of the lean transformation, Kaizen teams were established, production area arrangements were made and a culture of continuous improvement was established. In addition, the company established a system to monitor all of its operations in an integrated system.ERP (Enterprise Resource Planning)software investment. Thanks to ERP integration, all processes from raw material supply to production, stock tracking to shipment were planned and monitored on a single platform. In this way, manual processes were automated, data inconsistencies were prevented and coordination between departments increased.
• Measurable Results:The combined effect of lean manufacturing and ERP integration has resulted in a noticeable increase in the company’s efficiency. For example, in 2014 alone, the company’s turnover increased by approximatelygrew by 40%Reducing unnecessary movements and waiting thanks to lean applications made it possible to reach higher production capacity with the same infrastructure.
  
  Improved supply and production planning enabled the company to meet demand increases without additional costs. The ERP-based digital transformation has significantly reduced operational costs: In a similar project, thanks to real-time management of stocks,while inventory stock costs decreased by 25%, it has been observed that the supply chain efficiency has increased by 30%. Such gains are alsoIncreased efficiency with ERPis an indication of what you have achieved.
  
  As a result, the company has significantly reduced its operational costs per unit and has become able to offer competitive prices in the global market. Thanks to its high efficiency and low cost structure, it exports to more than 25 countries today without any problems and can sell 95% of its production to foreign markets. The lean and integrated management culture increases the company’s ability to adapt to changing market conditions.Operational cost reduction in SMEshas created an exemplary success story in this regard.

These two case studies demonstrate the tangible benefits that cost management provides to manufacturers in the cable industry. Thanks to steps such as energy efficiency, lean manufacturing and integrated ERP usage, cable manufacturers can reduce their costs and increase their profitability, while maintaining their competitiveness through efficiency gains.

These achievements serve as important leverage for companies on their path to sustainable growth. Based on this, the next and final sectionImplications for a Sustainable Financial FutureIn this section, the long-term effects of these strategies and their implications for financial sustainability will be discussed.

10. Implications for a Sustainable Financial Future

For SMEs operating in cable productionCost management in the cable industry, not only keeps today’s costs under control, but also ensures long-term competitiveness, financial resilience and growth.

The strategies we have covered throughout this guide have clearly demonstrated that:

• Understanding cost structureis a fundamental step in setting the right priorities.
• ERP systems, optimizes resource usage by strengthening data-based decision-making processes.
• Internal audit, increases efficiency by revealing hidden costs.
• Risk managementenables safe decisions to be made in environments of uncertainty.
• Compliance with regulations, minimizes the risks of possible fines and brand loss.
• Supply chain and inventory optimization, improves capital utilization by eliminating bottlenecks.
• Investing in new technologies, increases your production power for both today and tomorrow.

These strategies,sustainable financial managementIn terms of SMEs, it means not only short-term gains but also long-term stable growth, profitability and competitiveness in foreign markets. Especially in this period of increasing economic fluctuations and cost uncertainties, a systematic cost management approach secures the existence of SMEs.

The Next Step for Your Company: Meet Teolupus

If you operate in cable manufacturing or a similar sector and want to optimize your costs, make your processes transparent and gain resilience against uncertainties;TeolupusWe are here as.

What do we offer?

• Internal audit servicesWe reveal operational weaknesses and clearly show improvement opportunities.
• ERP consultancyWe digitalize your systems end-to-end and create data-based decision mechanisms.
• Risk management strategiesWe prepare your business for unexpected scenarios by developing

Contact us to take your company’s cost management competence to the next level. We would be happy to meet you and work together.

Teolupus – Your reliable solution partner in sustainable cost management.

Bu gönderi şu adreste de mevcuttur: Türkçe