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COST REDUCTION
“Cost cutting is no longer the
solution to sustainable profitability,
the key to success is finding creativ...
DEFINITION
“Cost reduction is to be understood as the
achievement of real and permanent
reductions in the unit cost of the...
Achieving the goals of cost
reduction



Reducing the cost per unit.
Increasing productivity.

How to reduce cost?


...
FishBone Diagram:
Areas of Cost Reduction
1.
a)
b)
c)
d)
e)
2)
3)
a)
b)
c)

Material:
Design.
Purchasing.
Storage.
Transport.
Production.
La...
4.Outsourcing
5.Sales and marketing
6.Energy
7.Production
Tools and Techniques of Cost
Reduction
1.
2.
3.
4.
5.
6.
7.
8.

Value Analysis.
Just in Time approach.
Standard costing.
T...
THANK YOU!
Dhirendra kr chaudhary
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Tools and techniques of cost reduction

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Tools and techniques of cost reduction

  1. 1. COST REDUCTION “Cost cutting is no longer the solution to sustainable profitability, the key to success is finding creative ways to prevent cost.”
  2. 2. DEFINITION “Cost reduction is to be understood as the achievement of real and permanent reductions in the unit cost of the goods manufactured or services rendered without impassing their suitability for the use that is intended”- ICWA London.
  3. 3. Achieving the goals of cost reduction   Reducing the cost per unit. Increasing productivity. How to reduce cost?      Elimination of waste Improving operations. Increasing Productivity. Cheaper materials. Improved Standards of Quality.
  4. 4. FishBone Diagram:
  5. 5. Areas of Cost Reduction 1. a) b) c) d) e) 2) 3) a) b) c) Material: Design. Purchasing. Storage. Transport. Production. Labour: Overheads: Increasing the production volume. Extension of market and price differentials. Size of business units.
  6. 6. 4.Outsourcing 5.Sales and marketing 6.Energy 7.Production
  7. 7. Tools and Techniques of Cost Reduction 1. 2. 3. 4. 5. 6. 7. 8. Value Analysis. Just in Time approach. Standard costing. Total Quality Control. Economic Order Quantity. Market reasearch. Benchmarking Inventory Management and Control.
  8. 8. THANK YOU! Dhirendra kr chaudhary

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