COST CUTTING IDEAS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Improve productivity Reduce rejections Reduce production stoppages Convert Sr employee into supp/ dispose old m/c Cut OT/Sub contracting Salary cuts, postpone increments/promotions reduce perks, benefits Temp layoff - Recruit on demand, pay partly Increase weekly off; w/o pay Reduce the rank/level/class of expenses Convert Sr employee into supplier Employ higher productive labour/machine than less productive ... Employ part time labour esp for legaliadminfaccts Employ temp labour from group/known companies for peak prodn Train all for all jobs - Job rotation Manage e mails; reduce links, converge decision making points Use broadband - utilise employee for other works Couple related works Incentives for employees to prevent wastage Combine deliveries/reduce no. of deliveries Reduce rejection/rework/service calls Reduce variations/errors > 6 Sigma Think small/special - Smaller SPMs instead std bigger m/c Plan ahead > Concept R & Ds/assembly trials before making toolings... Change inputs - MU/supplier/process Review non product spec of no value activities - packaging/packing/ Review inspection cost/extent of sampling; simplify inspn aids Review mtl/process spec for the latest technology/range Review courier/fax to postal Review courier matter/combine/mail and courier periodical summary Combine suppliers > fully BO/sub assemblies/assembfies..... Bulk purchase and reduce prices Standardise mtl spec/size/reduce varieties Reduce prices with suppliers - Flat bargain Work with suppliers targeting improvement in Q & Productivity > price Involve all employees in cost/productivity/Q improvements Reduce the slack> luxury like several company vehicles/mobiles ... Reduce slack > Higher power genset/low productive VI shift Reclassify the overheads responsibility Verify purchase cost based on value and negotiate Review cost data, update the processes and the norms, prices Revalue all the administrative works- delegate/eliminate

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COST CUTTING IDEAS

42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 Eliminate unnecessary/non utilised reports/redesign to simplify Eliminate report copies to no value adding executives Bust the bureaucracy - delegate authorities Avoid/reduce recruitment costs- Ads in a liers size/appearances Avoid smoking/drinking habit persons waste of time/leave due to ill health Standardise parts to reduce inventory/reduce purchase cost Plan well ahead at micro level to reduce errors/variations at all levels Change of raw mt supplier Combine purchase/delivery trips o vans Change of raw mtl spec Change of production methods/machines Postpone fringe benefits and disburse later retrospectively Order for bulk to reduce the price and plan for delivery schedules Concentrate more on the higher cost materials/suppliers (Pareto) Suggestion scheme specifically on cost reduction Reduce delegations to expedite the decision making Review each rule/regulation to ensure real value addition Reduce ofice space/equipment like computer; staf can work in shits Purchase bulk for cash; reducing overheads in follow up; transport etc Review the training need, methods Review internal trainer to train for the needs Look for freelance trainers to reduce the cost Contract for 3 year training schedule and bargain with the institute Plan for measured growth in proportional scale Eliminate strict procedures for small items/activities -requisitions for carbon, permissions Link Capex and business plans to avoid quick obsolescence of assets Centralise capex of all depts/all group companies/divisions Ensure the auditors/legal advisors are tough and ask critical questions Ensure the basic data are correct before making capex/investments Check for any hidden risks in capex/investment pushing the cost up Check if the capex/investment will improve the productivity really on short term basis Consider min 3 alternatives before deciding on any capex/investments Avoid futuristic capex/investments with hopes of utilisation Eliminate low margin products Delay the new ventures/new branches/divisions Review the real value of the premium location of ofice Cut down the size of the sales office according to the customer population Do the back office work in premium location to night to reduce the space cost Outsource back office works Encourage home work, reducing office maintenance cost (A/c, network etc Shift the company to a low cost place (transport the employees)

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COST CUTTING IDEAS

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 Rectify the old ec tlriment dedicated to some work Replace the old equip with latest if the time saving results in net cost reduction Reduce inventory carrying cost (keep it in transit or the supplier's go down nearer to you) Reduce the credit period to the customers Lengthen the credit period to the suppliers Reduce the production cycle time - .HT, Lean Manufacturing Avoid idle cash time; rotate cash efectively Close old debts with new loans reducing the cumulative interest efects Rearrange the loans short term to long term to reduce the interest; interest frequency... Sell assets that are not appreciating/will not appreciate Reduce/postpone/disburse in installments > dividends/bonus/benefits Lease the assets/investments - m/c; vans, building, genset instead of buying Employ concurrent engg to reduce design/dev time Produce wire cut parts instead thro tooling for development Use parts from products available in market instead developing tooling for development Improve the accuracy of the costing ( get more precise costing data) Improve cross functional communications Make sure all the employees of the depts are aware of the activities of all the depts Identify the higher cost activities in the production cycle (Pareto) and focus on top few Check and reduce non productive hours - m/c breakdown, absenteeism Redesign the fast moving high volume products for cost reduction Make cost reduction a fulltime job to a team (size according to the need) Outsource cost reduction (your trade information will go out) Find out the cost of all production activities and analyse for make or buy (sub contract) Allocate overheads project wise/product line wise for better control Work on profit center concepts Isolate activities/products yet to be established for close watch Reward and encourage individuals/sections/dept/divisions for better cost controlling Advertise the achievements of individuals/sections/diviSions among the entire company Interchange the cost reduction team between departments/divisions Try to get solutions through diferent technology groups Encourage conflicts among managers as much as you can mange to get all sorts of views Rotate functional heads Rotate employees among relevant functions Employee transfer - Strengthen the weaker depts/Restructuring Employee VRS Incentives for employees to prevent wastage Reduce slack > Higher power genset/low productive 3rd shit Order for bulk to reduce the price and plan for delivery schedules Review each rule/regulation to ensure real value addition Do the back office work in premium location to night to reduce the space cost

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COST CUTTING IDEAS

124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 Analyse the customer category, their purchasing patterns scientiically to improve forecasting Allocate overheads project wise/product line wise for better control Avoid credit/reduce credit terms Review cust reqt; slight reduction in parameters > share cost reduction Design to the purpose/cust reqt - no frill products Optimise transports/material handling Redesign/reduce sales touring, cust visits, demo, exhibitions etc Alt plan for costly hotels/negotiate/standardise travel styles Review each form of all dent to avoid diinlicatino writinn/data entry Combine forms/records to reduce no of forms/records Share the records among several depts and reduce no of copies Correlate and review communication hierarchy, speed, clarity delaying decisions Check if technology (even if it is costly) can reduce the cost eventually Check how each activity/process is carried out in world class companies Combine sales promotions visits Reduce customer hosting cost; hotel level, course level etc Fix/review minimum order value, minimum order quantities Close prodn lines/divisions/branches Identify the need for each person in sales ofices at premium place Split the no value added activities carried out in premium cost place Encourage the cash sales through incentives Increase the number of cash sale products Improve market forecasting accuracy thro latest techniques/technology Reduce product liability terms Use technology to reduce process time in all dept CAD for design/e mail etc Analyse the customer category, their purchasing patterns scientifically to improve forecasting Conduct decision making meetings to avoid delay (provide all info early for home work) Watch closely if any customer is going away Watch if the purchasing frequency of any customer is decreasing and learn why Focus the product range for no of customers, volume of business, frequency of sales etc Correlate the above and the profit margins Increase the price marginally in high volume selling products alone Implement the price increase in stages Focus on all improvement activities on high volume products Employ six sigma, lean manufacturing methods, lean six sigma etc in al/depts/processes Find out low end markets for tough quality product to relax tolerances/spec Find out premium markets for high quality products for premium pricing Bench mark processes from totally dif industries/regions - work instructions in Bihar coal mines

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