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||5141||2004||Sysco has been the nation's leading food distributor for over a decade. The company has built new distribution centers, nurtured its customers via its 8,000 person sales force, and cranked out private labels foods that brought in $11 billion last year. Sysco will be opening the first of several centralized redistribution centers that will help cut back on slower moving inventory at 85 of its existing locations and reduce the average item's days on the shelf by a third.|
|2||5411||2002||Unlike Webvan and other defunct Web Grocers, Net Grocer doesn't own several warehouses and a fleet of moving vans. It ships nearly all of its products from a single 120,000 square-foot warehouse via Federal Express.|
|3||5961||1996||Spiegel was plagued by transitional expenses last year related to its move into a new distribution center in 1994. But the company is finally settling in a new one-floor facility. Previously, it used 13 different facilities.|
|4||5961||1997||One of the more high-profile consolidation efforts revolves around warehousing. As part of its strategy to cut inventory handling costs, USOP plans to build district fulfillment centers (DFCs).|
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