Reduce the Rate of Cost for the Input Used to Produce the Output

Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.

F. Change source of supply to a less expensive supplier:

A change in the supplier relationship may enable the company to switch to a less expensive supplier. The supplier may be less expensive because it has lower costs or because it reduces the company’s logistic expenses.

Use supplier with larger scale or lower profit requirements

No.	Industry SIC	Year	Notes
1	2086	1997	Pepsi discussing plan with its bottlers: instead of bottlers providing syrups to restaurants, Pepsi wants food-distribution companies to do so. Restaurants can often get volume discounts through distributors, thus may be more likely to buy Pepsi.
2	2800	2008	Dow Chemical has had a more consistent earnings growth due to its "asset-lighting" strategy. Dow Chemical has been carving out assets in Dow's lower-margin commodities business and placing them in emerging markets like the Middle East, China, Russia, and Brazil. It contributes the instructions for producing the plastics and chemicals, while its partners provide low-cost feedstocks and access to new markets. Dow ends up with the lower capital expenditures and less risk, allowing it to focus on research and its higher-margin performance chemicals.
3	3572	1997	While high-end vendor Storagetek has its own products in the marketplace, it buys DLT drives from Quantum for its mid range libraries.
4	3711	2004	ChryslerDaimler and its unionized workers are letting others shoulder the capital and labor costs of building a car. The number of jobs linked to Jeep operation in Toledo will remain steady. A fourth of those jobs will shift from Chrysler's payroll to the suppliers'. Current Chrysler employees get to choose whether to move to a supplier, retrain for another Chrysler job, or retire. The UAW workers also have to agree to a two-tier wage system, so some workers will be earning less than their peers in other factories.
5	4512	2005	Northwest Airlines is looking to outsource flight attendants as a way to cut costs. Northwest is also seeking to move all the flight-attendant jobs on planes with 77 to 100 seats that fly in North America to attendants not on the Flight Attendants Association Union seniority list, and to cut the number of U.S. flight attendants allowed to work on flights from Japan to the rest of Asia to one from two. The seniority list ranks attendants according to hire date, and the ranking affects pay, assignments and other quality life issues. Northwest is seeking cost savings of $195 million a year from the flight attendants through 2010.
6	4522	1997	Maintenance activities are outsourced to third-party providers on a fixed-cost basis, consistent with management's strategy. Routine maintenance is provided by various companies subcontracted by Atlas at the airports in which the company operates.
7	5122	2006	Pharmacy benefit managers (PBMs) say they are saving employers money while their own profits are rising. Alamo Group Inc. said it never used to look at individual prescription claims to estimate how much profit Alamo's PBM, one of the big three, was making on generic drugs. When a smaller rival showed it some figures a year and a half ago, it was surprised by the amount of markups. Alamo switched over to the smaller PBM, Hyde Rx Services Corp.
8	5511	1999	In most industries, Internet retailers' raison d'être is to sidestep existing distributors. But Autobytel and today's other car-selling Web sites got into the game by kowtowing to dealers.
9	5621	2008	Warnaco, a design and marketing company for clothing and accessories, is signing for more new and long-term licenses for Calvin Klein properties. Warnaco will pay Phillips-Van Huesen, owner of the Calvin Klein brand, $38.5 million for a variety of CK properties. The pact will give Warnaco the rights to operate Calvin Klein jeans and accessories in Europe, Asia, and Latin America, as well as CK Calvin Klein accessories stores in Europe and Latin America.
10	6141	2006	One of the Web's most intriguing trends is the rise of peer-to-peer lending communities such as Zopa Ltd. and Prosper Market Inc. These web co-ops depend on a strategy borrowed from real world co-ops: shame. People repay real world co-ops because they fear losing face among peers. So Prosper has 1,000 organized groups set up to let members lend to one another. If members know each other, they'll have better business.
11	7011	2005	Marriott and to a lesser extent Hilton tend to franchise more than own and operate their own hotels. That helps keep revenue-in the form of franchise fees-coming in during downturns.
12	7371	2007	Companies like LiveOps and Arise Virtual Services allow its business clients to offer jobs for "virtual" call center agents who work from home at their own schedule. LiveOps offers specialized training. Homeshoring can help companies cut overhead and labor costs, shift the work force based on caller demand and improve their customer care. People who apply for at-home jobs are typically more responsible and articulate and are happy with the flexibility.
13	7372	2006	As more companies and government agencies use open-source software, two software companies – Microsoft and SAP – stand out for not embracing open source at all. The evolution to open-source will be in terms of cost and simplicity. The evolution has grown as more companies have developed open-source products. JBoss makes an open-source application server that connects data with applications. MySQL, Enterprise DB, and Ingres offer free open-source database products. Other firms, such as SugarCRM, Compiere, and Pentaho are using open source to build applications for such units as sales, human resources, and business intelligence.
14	7379	1999	AOL argues it can negotiate better deals for its customers with phone companies because of its huge subscriber numbers-more than 18 million.

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