Cost reduction strategies

SAVINGS FOR PROFITS
©
BY SUBODH KUMAR SINGH

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 are
Raw material : 60%
Fuel: 6%
Manpower:11%
Adverisement :5%
Logistic:9%
Taxes : 5%
Maint & others : 4%
Following are major areas of
1. Raw material procurement:
a) Bulk buying
b) Opportunity buying
c) Make or buy
d) Annual Rate contracts

2. Logistics- Inbound and Outbound:

a) Route mapping
b) Loadability

3. Warehouse and Stores:
a) Low inventory
b) Space management
c) EOQ
4. Manufacturing Process (Production) :
a) manufacturing
b) Automation
c) OEE

5.Energy, fuel & Water
a) Motors
b) lighting
c) compressors
d) fuels
e) recycle
f) Waste water management
6.Information Management
Enterprise Resource management

7. Human Resources
Out sourcing





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