In today's world when Corporate are struggling for profits and with fierce competition in the market, cost reductions, productivity enhancement and lean organizations have become today's mantra s for survival.Folllowing are the key area where you can implement cost reduction methods with significant results.Cost distributions of any manufacturing industry are following

Raw material : 60%

Fuel: 6%

Manpower:11%

Adverisement :5%

Logistic:9%

Taxes : 5%

Maint & others : 4%

Following are major areas of cost reduction

1. Raw material procurement:

a) Bulk buying

b) Opportunity buying

c) Make or buy

d) Annual Rate contracts

e) E-procurement

2. Logistics- Inbound and Outbound

a) Route mapping

b) Loadability

c) Transportation

3. Warehouse and Stores

a)Low inventory

b) Space management

c) EOQ

4. Manufacturing Process (Production)

a) Manufacturing -

b) Automation

c) OEE

5.Energy

a) Motors

b) Lighting

c) Pumps

d) Cooling Towers

e) Compressors

f) Fuels

6. Packaging

7. Recycling of waste and waste reduction

Waste water management

8.Information Management

Enterprise Resource management

9. Human Resources

Out sourcing

For more details &information on cost reduction ideas

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