Cost Reduction Strategies

cost reduction strategies

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

 

Click thumbnail to view full-size
manufacturing cost automationpackagingsupply chain managementenergy
manufacturing cost
manufacturing cost
automation
automation
packaging
packaging
supply chain management
supply chain management
energy
energy

Comments 1 comment

nationalwholesale profile image

nationalwholesale 7 years ago

Great checklist on areas where you can reduce costs! Low inventory is important, especially if companies do find themselves in a position where excess inventory is hurting the bottom line.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working