Managing Loss in Jewelry Manufacturing - Secrets to Optimize Profit and Elevate Brand

I. What is loss in jewelry manufacturing and why is it important to manage it closely?

What is loss in jewelry manufacturing?

Loss is the portion of material that is lost during the production process, including gold, silver, gemstones, accessories, or labor-related costs. Whether little or much, loss always exists and needs to be measured with precise production management tools.

Why is managing loss important?

Loss in jewelry manufacturing directly impacts business efficiency. High loss increases production costs, raises prices, and directly erodes profits, especially when the prices of precious metals fluctuate continuously.

In addition, a lack of control in the process can lead to quality discrepancies, affecting product stability, brand reputation, and customer trust in the long term.

Further reading: Why traditional gold shop management software is not enough? | Leonix

Managing Loss in Jewelry Production

II. Causes of Loss in Jewelry Production

Technical Causes

In jewelry production, some loss is unavoidable due to technical specifics. Precious metals can evaporate when melted, cast, or welded at high temperatures, while the processes of grinding and polishing create metal shavings and dust. Without appropriate recovery mechanisms, this loss will silently accumulate over time.

Human Causes

Loss increases when the skill level of workers is uneven or when operations are not optimized. The lack of standardized processes leads to each person working in different ways, causing discrepancies in material usage. Additionally, loose supervision in weighing, measuring, and recording quantities makes it difficult to detect losses in a timely manner.

Management System Causes

Many workshops struggle to control loss due to the absence of workshop management software or accurate inventory tracking tools. Dispersed data, inadequate inventory and storage of precious metals, along with a lack of automated reconciliation reports for each process, prevent businesses from clearly identifying where and why losses occur.

III. Steps to Measure and Monitor Loss Effectively

To control loss, businesses need to accurately measure and fully record changes in materials through the following steps:

Steps to Measure and Monitor Loss Effectively

Step 1. Establish standard loss rates for each process such as casting, welding, engraving, or polishing. This standard serves as a "benchmark" to help distinguish between reasonable loss and abnormal loss that needs to be controlled.

Step 2. Strictly measure "Input - Output"; each product or semi-finished product must be weighed before and after each stage, thereby accurately determining the amount of material used and the resulting loss.

Step 3. Apply management technology. Using a jewelry MES/ERP system can automatically calculate losses by stage, linking data between the workshop, warehouse, and accounting.

See details: The role of MES in controlling every gram of gold | Leonix

Step 4. Periodic data analysis. Through loss reports over time, by stage, or by worker, businesses can quickly detect abnormal signs and timely adjust processes, equipment, or train personnel to reduce losses.

IV. Solutions to reduce losses in jewelry manufacturing

Standardize the production process

Businesses need to establish and adhere to a unified set of processes. The more standardized the process, the lower the level of deviation and losses beyond control.

Training and enhancing craftsmen's skills

Train technicians to master standard operations, reducing manual errors that cause material loss. At the same time, create awareness of saving and valuing precious materials.

Invest in modern equipment and technology

Using closed metal melting machines helps reduce the evaporation of precious metals, while scrap recovery equipment, micro-weighing scales, and surveillance cameras enhance accuracy and control at critical stages. Concurrently, implementing specialized jewelry ERP allows real-time tracking of material flow, acting as a "digital surveillance camera" to ensure transparent and efficient management throughout the workshop.

Effective recycling and recovery

Gold dust and scrap containing precious metals need to be collected and managed centrally to avoid losses. The application of extraction and metal recovery technology helps businesses effectively reuse materials, thereby reducing input costs and limiting dependence on new metal sources.

Increase transparency and oversight

The electronic log allows for the complete recording of the entire operational process in real-time. At the same time, clear delegation of authority between the craftsman, inventory department, and accounting helps limit losses, avoid overlapping responsibilities, and ensure that all losses are monitored and transparently accounted for.

V. Case Study - Giang Kim Hoàn giảm 40% hao hụt sau 6 tháng nhờ áp dụng phần mềm ERP

By implementing Odoo ERP as a central management platform, Giang Kim Hoàn (Ho Chi Minh City) has made a breakthrough in optimizing the loss control process. The system allows for real-time tracking of material flow by weight, tightly connecting data between the workshop, warehouse, and accounting on a single platform. 

Thanks to the combination of software technology and a high-precision electronic weighing system, the business has achieved impressive results after 6 months: a 40% reduction in precious metal losses, a 25% increase in scrap recovery rates, and a nearly 18% boost in profit margins. This solution not only stops at numbers but also helps Giang Kim Hoàn standardize processes, make data transparent, and enhance the sense of responsibility among the craftsmen, creating a professional management foundation ready for long-term scale expansion.

Further reading: Why traditional gold shop management software is not enough? | Leonix

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