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.

Combine purchases with another purchaser

No. Industry SIC Year Notes
1 0 2007 Lobbying and legislation has made it easier and cheaper for small companies to offer health insurance to their employees. The HealthPass purchasing cooperative handles much of the backend work for employers. It gives small companies access to more than 30 coverage options. By banding together, entrepreneurs can take advantage of the discounts granted to larger companies.
2 3711 2008 BMW and Daimler's Mercedes-Benz division are in talks to explore teaming up developing, producing, and purchasing car components. The talks seek to identify components and technologies where both companies could cooperate on lowering costs without diluting their brand values or conceding a competitive advantage. Both companies have appointed key executives to head "profitability teams" to explore ways to increase their profits.
3 5112 1997 Small stationers joining to form buying cooperatives in order to lower costs to compete with office superstores like Office Depot, Staples. Before the coming of the superstores, customers were paying high prices for office supplies, profits were fat.
4 5331 2004 To cut costs, Sam's Club began leveraging its buying power with that of Wal-Mart's discount stores and stopped offering coupons, rebates and discounted memberships.
5 5900 2008 Refined group buying services in China, called Tuangou, are more proving successful than the original group buying services in the U.S./Europe. The original services linked the price to the number of customers that enlisted for the product, so customers wouldn't find out the price until the deadline. Tuangou services sometimes announce the size of a discount on the site ahead of the scheduled buying events, but for the most part, they leave the negotiations to the shoppers, who choose leaders among themselves to conduct the bargaining. Typical discounts are 10% to 30% of the MSRP. Shoppers know what the final price is at the end of the event, which is key to satisfied customers.
6 7379 2000 Commerce One developed the world's first Internet based B2B procurement network, where companies can buy everything from office supplies to telecommunications equipment. The firm is expanding through partnerships with blue chips such as Microsoft and GE.
7 8221 2005 The University of Minnesota, University of Iowa, Iowa State University and the University of Wisconsin will buy their own link to a nearby research hub. It will cost each school $2.5 million to $5 million over five years. The universities will be able to use the network for engineering experiments they wouldn't be able to do with a rented fiber system.

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