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 multiple functions in fewer locations:
Combine related businesses
|1||3571||2003||HP's not the only firm combining separate storage and server business units. IBM and Dell Computer Corp., for example, are doing much the same thing in the face of increasing price competition and three years of economic slowdowns.|
|2||3630||1992||A Raytheon unit (Amana Refrigeration) is trying to sever ties to Cooper Distributing Co. Raytheon announced in 1991 that would strengthen appliance operations by consolidating distribution channels.|
|3||4213||1997||Viking freight systems was converted from virtually 4 freestanding operations with 4 of everything into a streamlined operation by converting to a single company with one sales force and one computer system.|
|4||5961||1997||As U.S. Office Products brings newly acquired companies into its corporate structure, it implements operating efficiencies by (1) generating cost savings through centralized volume purchasing; (2) consolidating distribution and administrative functions.|
|5||6021||1995||Chase and Chemical are expected to squeeze costs from their current combined base, as they close redundant operations between now and the end of 1997.|
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