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.
Time: shift demand for ICDs to reduce peaks:
Change pricing to shift demand
|1||6021||2002||Wells Fargo is now charging customers $1-$2 a month if they talk to agents too many times instead of using the automated option. "You can't always afford to provide customers with convenience and their preference." Now, when customers hit "zero" to speak to a rep, they will be directed to the main menu or even disconnected.|
|2||4512||2004||A discount of $5 is awarded for booking tickets online, as a move to promote online ticket reservation. As a result 63% of the tickets were booked online in 2002, which is also JetBlue's cheapest form of distribution.|
|3||4911||1996||In the U.S., utilities reduce electricity peaks through pricing schemes and incentives for consumers to cool their homes more efficiently.|
|4||4911||2005||Pacific Gas & Electric Co., Southern California Edison, and San Diego Gas & Electric Co. plan to eventually replace millions of conventional electricity and gas meters with as many as 15 million high-tech "time of use" devices at a cost of some $3.6 billion. PG&E and SDG&E are in the process of selecting equipment makers for pilot programs involving a few thousand meters, while Edison proposes to design its own meters under a $1.2 billion program. The new gear would give utilities up-to-the-minute information about how and when homes and small businesses use electricity. Armed with that data, the utilities could raise prices during peak periods to drive down energy use. High-tech meters could also save money in the expense of reading meters as well as improving outage detection and repair systems.|
<<Return to Reduce Input Not Producing Output