We have built this section of the website to help you develop many ideas to reduce the cost in your work center or business. The examples we provide come from the experiences of many other companies. We have organized the examples supporting your cost reduction work around the four methods of cost improvement:
Reduce the Rate of Cost for the Input,
Reduce Inputs not Producing Output,
Reduce Unique ICDs in Processes and
Spread ICDs Over New Output.
We further divide each of the methods of cost management ideas into more discrete concepts in order to expand your ideas.
A. Improving Efficiency of the Input, (I/ICD), by reducing the quantity of I producing an ICD
- Reduce rate paid per unit of Input (I) – This action reduces the quantity of Input used for an ICD because using an Input with a lower rate is equivalent to using a fraction of the original Input. Examples >>
- Reduce non-productive Input (I) – This action makes Input levels more directly variable with the ICD by reducing the amount of the available Input that is wasted or idle. Examples >>
B. Improving Effectiveness of the ICD, (ICD/O), for each ICD used in the Output
- Reduce unique Intermediate Cost Drivers (ICDs) – This action eliminates a unique ICD used to produce the final Output (O). Examples >>
- Increase the Output (O) over which a fixed cost Intermediate Cost Driver (ICD) is used – This action seeks to use a unique ICD with new Output. Examples >>
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