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%.

B. Reduce the quality of the input used by using a cheaper form of the input:

The reduction in quality should bring with it a reduction in the rate paid for the input.

Use input with lower Performance: Less Convenience:
Increased distance from coordinating location

No.	Industry SIC	Year	Notes
1	0	1992	With a tightly coordinated network of plants in high-cost end markets and low-cost manufacturing centers, multinationals can achieve new economies of scale and cut costs by eliminating redundant processes.
2	0	1996	German and Japanese managers tend to pay more than Americans for the equipment they buy, relying too heavily on high-priced local sources.
3	0	2007	In response to rising airfare and hotel costs, business travelers are using secondary airports near their destinations, for a savings of 10 to 20%. Discounters often use these airports as well.
4	5331	2007	Software is allowing large retailers to implement more logical scheduling and reduce costs. Mervyns has adjusted its staffing to include a lot more part-time workers, which reduces costs. The system helps retailers conform to federal wage-and-hour laws and state variations. It may also alert management when a worker is approaching full-time status or overtime, which would require higher wages and benefits.
5	6141	2004	America's small towns are emerging as alternatives as U.S. companies continue their global search for cheap labor and locations for call-centers and other back-office operations. By moving out of major cities, where real estate and labor are expensive, some companies find that they can save millions of dollars. And productivity gains are often palpable. U.S. Bank recently picked Couer d'Alene, Idaho for a new call center for its growing credit-card services division.
6	7300	2003	Manufacturers have been outsourcing production to foreign countries for cheap labor and low taxes for years now. U.S. service workers are now afraid their jobs will go to India, where the English-speaking labor is available for wages 80% less than here. $356 billion worth of global financial services will relocate to India in 5 years and 2 million jobs to go there.

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