Cost Reduction Strategies             
                              
Cost reduction strategies                                        


Cost  Reduction  Lesson

PROCUREMENT :The companies which have  greater geographical  presence or  are multinational can  
achieve better price by buying bigger volumes  instead of buying for individual units. Central buying policies are
recommended for such unit .

Bulk buying results in  annual contracts for a period of  twelve months for entire year requirement with prices being
finalised  for the entire period .


Most of the commodities  and raw material  has seasonal  cycle  of prices  as they peak and fall in intervals .Hence
we can book maximum amount of our requirement  when prices are low .

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Cost Reduction Strategies
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Want to improve profits?

Beat competition ?


Try  Cost Reduction Strategies  for  Turnaround

Learn COST REDUCTION IDEAS that  would  boost  profits, cut losses
and improve productivity of the manufacturing unit whether Big ,Medium
or Small   . Ideas which are easy to understand & Implement.Each idea has
potential of saving upto 20-30%.


What is cost reduction


It is broad  program where everyone is focused on reducing cost from
each areas of manufacturing activity.Cost reduction can be achieved
through reduction , elimination , modification , substitution or innovation .
All cost drivers are taken into account and with thorough analysis the best
and least cost path is adopted for each activity.The best method to
achieve results are to bench mark operating parameters to world class
companies .This drives  every One to match or even surpass these figures.


The major parameters for any manufacturing unit

  • cost per unit ($/unit)

  • man-hours/unit

  • units produced/unit time

  • break down time (%)

  • change over time ( min/hrs )

  • waste (%)

  • defectives (%)

  • fuel consumption (k therms/unit)

  • electricity consumption (kwh/unit)

  • water consumption ( kltrs /unit )

  • inventory turnover ( %)

  • lead time (min/hrs / days)


Why cost reduction


  • profits

  • waste reduction

  • increase productivity

  • competition

  • resource conservation

  • image enhancement


Where to implement cost reduction

Areas for cost reduction are

  • raw material procurement

  • logistics - inbound and outbound

  • production ( process ,time and work study,maintenance ,automation)

  • energy

  • human resource ( out sourcing )

  • sales & marketing

  • finance

How ?

In today’s  competitive world Corporates and businesses are struggling to
maintain profits and  healthy bottom lines .Cost of  production ,fuel, raw
material and human resources is rising each year . These developments
has prompted people to  look for  Cost reduction Ideas &method s.  
Those who have opted for focused cost reduction  strategies have
survived those who could not managed have perished .In recent  economic
down turn it becomes more important to make  cost reduction program
a major initiative in  industry .Companies  are finding it difficult to retain
people and are laying off people which is un precedented in recent history
of  industrial recession .Companies have to develop its own cost reduction
program for savings  without cutting jobs .



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Read Manufacturing industry  Cost savings related news , articles ,
development in and around world .Energy , Supplychain , Human Resource
, Packaging , Automation , Waste Reduction , Sustainable Development .
Outsourcing activities.






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