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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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 ?

Cost reduction can be achieved through reduction , elimination , modification of
manufacturing activity. Through
in depth  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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