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%.
F. Change source of supply to a less expensive supplier:
A change in the supplier relationship may enable the company to switch to a less expensive supplier. The supplier may be less expensive because it has lower costs or because it reduces the company’s logistic expenses.
Source from new suppliers in better locations for costs:
Near sources of inexpensive energy
|1||0||2007||Large companies are investing in clean technology to reduce their energy costs and fund new technologies. Honeywell international partnered with EniSpA to construct a plant in Italy to produce an equivalent to diesel fuel derived from vegetable oil.|
|2||3334||2006||As oil prices soar, some of the nation's biggest energy consumers are revamping their operations to shrink energy bills. Manufacturing company Alcoa is building a $1 billion-plus smelter in Iceland that will churn out aluminum using relatively inexpensive glacial runoff to generate electricity. To harness that hydropower, local authorities are building a dam. The company also may build a second smelter in Iceland, this one to be powered by geothermal energy from volcanic gases.|
|3||3334||2007||As prices for energy increase, aluminum companies are working to secure dedicated power sources, sometimes selling off divisions to free up cash. Alcoa Inc is increasing production in Iceland. The company has secured a dedicated source of hydro power in the country and will invest in alternative technologies.|
|4||3334||2007||As prices for energy increase, aluminum companies are working to secure dedicated power sources, sometimes selling off divisions to free up cash. Norsk Hydro joined forces with Qatar Petroleum to build a plant in Qatar. Norsk has closed facilities in high-cost Norway and Germany.|
|5||3334||2007||As prices for energy increase, aluminum companies are working to secure dedicated power sources, sometimes selling off divisions to free up cash. They are doing so by buying local power plants or shifting production from Europe and North America to remote parts of the world where energy is cheaper and in greater supply like Siberia and Iceland.|
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