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||3571||2006||Hewlett-Packard is making sweeping changes in the way of HP operations. The company will soon replace 85 loosely connected data centers around the world with six-cutting edge facilities. It will also be slashing thousands of smaller projects at the decentralized company to focus on a few corporate-wide initiatives – including scrapping 784 isolated databases for one companywide data warehouse. If the changes are successful, HP's annual spending on tech should be cut in half in the years ahead, from $3.5 billion in 2005.|
|2||3571||2006||IBM is reorganizing its global workforce to lower costs without skimping on service. IBM plans to bunch employees in competency centers that are distributed around the work. For example, it cost IBM $70 per PC to have someone individually install software onto clients' PCs. Now IBM has 200 people in Toronto running a software installation factory for clients worldwide. They assemble packages that are delivered to machines over the Net. The cost: 20 cents per PC.|
|3||3571||2008||Many IT companies, such as Hewlett-Packard Co., are looking to consolidate their IT systems to cut costs. More companies are trying to save energy and maintenance costs by consolidating large numbers of old computers and moving to new data centers that use less space and power. A Forrester Research survey showed that companies can lower operational costs by at least 20% when they consolidate IT.|
|4||3571||2008||Many IT companies, such as Hewlett-Packard Co., are looking to consolidate their IT systems to cut costs. HP has been in a project since 2005 to cut the number of computer programs it uses by more than half, and reduce the number of its data centers from 85 to 6. HP wants to cut the 4% of its annual revenues that it uses on IT system maintenance down to 2%. It plans to cut IT power use and the IT department in half.|
|5||3572||2002||In storage, with the ever-increasing speeds and capacities of networks and the Net, the amount of data being stored at large companies is growing even faster than the cost of storage equipment is declining. That puts pressure on users to economize. Instead of continuing to buy and add new devices dedicated to each computer, companies are using techniques called "storage area networking" and "network attached storage" that concentrate resources in one or a few locations.|
|6||3577||2004||A rigorous statistics-based method known as Lean Six Sigma enabled Xerox to and fix myriad quality problems, reducing operating costs for Xerox and its customers. Xerox saved Bank of America $800,000 by consolidating its document centers – where things such as training manuals for tellers are printed – from 13 centers to 4 and by halving the time to complete a job.|
|7||5141||1997||The company has achieved lower management information expenses as it reduced its data centers from 28 in 1994 to 10 at the end of 1995 to approximately 4 at the end of 1996.|
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