Reduce the Units of Input Not Producing Output
Reduce units of Input (I) available but not producing Intermediate Cost Drivers
(ICDs). This action makes Input levels more directly variable with the quantity of the ICD by reducing the amount of the available Input that is wasted or idle. For example, an employee (I) might produce one subassembly (ICD) per day. During that day, the employee spends a total of one hour waiting for parts for the subassembly. If the Company could eliminate that one lost hour of the employee's work day by providing parts in a more timely manner, the Company could reduce the number of employees (I) needed to produce the same subassembly (ICD) by 1/8th.
B. Shift demand to use unproductive resources.
The company may shift demand from one location, or time period, to another in order to take advantage of idle capacity.
Location: centralize activities
Place single function in fewer locations:
|1||5211||2001||Home Depot's first decision was to cut 9% of the new stores planned for this year-opening 204 stores the same as last year. He also flattened levels of management, made regional managers more accountable, and centralized purchasing in Atlanta.|
|2||5311||1996||Sears cut down the channels through which store managers had to order products from 12 to 4. That helped increase the average load of delivery trucks to 90% of capacity from 60%.|
|3||5411||2004||On the organizational side, another UK retailer, Tesco, has extended its supply chain director's responsibilities to include managing the store shelves-which means the store managers are no longer responsible for ordering items and replenishing shelves, the supply chain is. Supply chain and category management teams now work closely together to improve coordination of shelf space, promotion and new product introductions.|
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