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%.
A. Purchase in Larger Quantities:
Purchase in larger quantities to get lower unit prices. In most markets a customer who purchases in larger quantities gets a lower unit price than one who purchases in smaller quantities. These concepts increase the amount of purchases the company makes at one time.
Reduce number of suppliers to buy more from a few
|1||2452||2005||Pulte Homes Inc. is insulating itself from downturns. Pulte Homes is choosing a common set of fixtures to use nationally. It's one part of the company's ambitious effort to rethink the homebuilding business for the 21st century. Pulte is using its size in a bid for more efficiency and cost savings.|
|2||2844||2004||Avon expanded its cosmetics business globally by rebuilding its manufacturing and transportation infrastructure from top to bottom. Once Avon was able to see the supply chain as a whole, other benefits came. Avon had once considered the idea of labeling b|
|3||3572||1997||PC and server system producers are demanding better deals from their vendors and are reducing the number of parts suppliers. Thus, they are more demanding but giving larger amounts of business to fewer suppliers. The result is industry consolidation.|
|4||3711||2001||In the automobile industry today, the automobile companies are no longer knitting together individual components from diverse suppliers. Instead, they are buying subsystems from fewer tier one suppliers.|
|5||5045||2000||Nu Horizons has carved a niche for itself in its industry by keeping product lines tight and supplier numbers small. It has distribution contracts with only 25 suppliers.|
|6||6722||2004||In a world once dominated by Wall Street stock-trading houses like Citigroup Inc. and Goldman Sachs Group Inc., Fidelity Investments and other big money managers now hold most of the cards. Fidelity has installed a tracking system to see which brokers can|
|7||8062||2006||To reduce errors, hospitals are prescribing innovative designs. The new St. Joseph's Hospital facility will have standardized rooms, so that in an emergency, doctors and nurses would know exactly where to find things. The standardized, pre-fabrication approach enabled the hospital to get discounts from vendors, and whittled down the budget, allowing the hospital to build a postpartum recovery room, a new diagnostic area, and an education center.|
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