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.
|1||0||2004||Linux, instead of using expensive software engineers, used volunteers. A development model even more efficient than outsourcing work to India's young coders. Even IBM, with its multi-billion dollar research budget, finds this deal too good to pass up: Linux is now at the heart of the company's enterprise computing strategy.|
|2||4512||2004||Credit card companies have become saviors of the ailing airline industry. Bank One extended $600 million in credit to United Airlines in December 2002 when its card partner went into Chapter 11. Citibank stood ready to finance partner American Airlines in April 2002, when it was near Chapter 11. In Delta's case, American Express is extending just $100 million of credit but prepaying $500 million for SkyMiles points.|
|3||4512||2005||European plane maker Airbus is agreeing to lend the merging carriers US Airways and America West $250 million. In exchange, they will become the North America launch customer for Airbus' planned A350 aircraft.|
|4||4512||2005||United Airlines Inc. is trying to cut costs by dropping its Wisconsin regional carriers as a partner that gets thousands of passengers. By anteing up $125 million for stock in the new US Airways, Air Wisconsin is buying the right to get new feeder traffic from the merged carrier. The carriers are counting on so far unnamed credit card companies to sign on to get the right to provide mileage based credit card services in exchange for $300 million signing bonuses and loans.|
|5||4512||2005||America West and US Airways planned merger is expected to have about half of $1.5 billion in new capital to come from the carriers' own vendors, including a few other carriers, a manufacturer and a credit card company or two. The arrangements mark an extension of the industry's use of vendor financing that other carriers and sectors could easily mimic. Manufacturers and financiers have helped the airlines finance big ticket items such as planes and jet engines. This merger will expand the financing into new areas such as air miles for incentive programs and maintenance.|
|6||6159||2005||From 1999 to 2001, Acosta went through a series of five roll-up acquisitions, which resulted in multiple formats for revenue recognition. With help from GE's experts, revenue processing soon took 15% fewer man-hours, while sales data became more precise.|
|7||6159||2005||In 2002, General Electric signed off on a $50 million working capital line of credit for Acosta. GE Commercial Finance was chosen due to a wealth of bundled services to encourage growth. In three years, GE has saved Acosta more than $6 million on yearly transportation costs. GE has also helped Acosta tweak its accounting system to be 15% more productive.|
|8||7372||2004||Consider the development of Linux, the other operating system. In 2001, the last time someone counted, Linux had more than 30 million lines of source code, representing something like 8,000 person-years of development time. Had this software been developed by well-compensated software engineers, the bill would have come to roughly $1 billion.|
|9||7372||2005||IBM is allowing open-source projects to use its intellectual property free of charge in an effort to fend off Microsoft Corp. and its Windows monopoly. IBM pledged to make 500 of its software patents, valued at about $10 million, freely available to open-source software projects such as the Linux operating system and the Apache Web page server software. In a strategy it calls “collaborative innovation,” it shares some of its intellectual property, hoping to bolster open-source alternatives to Windows, such as Linux. Such programs are shared by thousands of companies and tens of thousands of programmers. It helps IBM create a non-Microsoft ecosystem. By selling a server with Linux, IBM boosts chances of selling databases, application integration software, and services. Big Blue is also creating “innovation networks.”|
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