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%.
Sometimes it is possible to break the price of a purchase into its component parts. Then the company may seek to substitute a less expensive component for a more expensive component to reduce the effective rate the company pays on its purchases.
|1||0||2008||Managers need to learn how to bond with remote employees by close contact and clear objectives. If managers can't hire team members personally, have the managers meet them on their turf in either an individual meeting or town hall-like meeting. The meetings are a good way to set the tone for open and frequent communication with remote employees. Use simple and clear language as much as possible when meeting employees, not overdoing it on the metaphors and analogies. Communicate each person's role and business objectives regularly, and establish agreed upon ways to resolve conflicts and solve problems early on.|
|2||6321||2002||A self-insured company typically gives an employee who is single $1000 in pretax health care money to spend without restrictions ($1500 for a childless couple, $2000 for families). If the amount is exceeded, the employee is responsible for a $500 deductible, after which the employer picks up 80% to 100% if the bills. Unspent balances are rolled over for the next year.|
|3||7319||2004||Yellow Book USA is biting into major phone companies' profits as it lowers ad rates to attract more customers. The company is housed in one building with a sales force of 3,300, in comparison with Verizon's sales force of 2,100 at its headquarters. Yellow Book has sales that are only about a quarter of Verizon's $4 billion in yellow pages revenue. Yellow Book agents, however, don't have their own email accounts or laptops, though they do get small allowances for cars and cell phones.|
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