Increase the Output Over Which a Fixed Cost ICD is Used
This action reduces the quantity of a unique fixed cost ICD used to produce a unit of Output by increasing the units of Output. For example, a new product design, or a new process patent, are both ICDs that have virtually limitless capacity for use. These are fixed cost ICDs. You pay for them once and you can use them over a virtually unlimited amount of Output. Their ICD/O ratios are limited only by the current demand level for Output.
Use fixed cost ICDs with more customers
By using fixed cost ICDs with more customer volume, the unit cost of the ICD declines as a component of the final Output cost.
Use fixed-cost ICDs with new customer segments. Sell ICDs in major cost functions of the company:
Sell service ICDs
|1||2400||1989||Weyerhaeuser VP began cutting costs by selling laser printing services on the open market.|
|2||2834||2006||Pfizer Inc. is planning to introduce a heavily discounted generic version of the antidepressant Zoloft after the brand-name drug loses domestic patent protection. Pfizer's plans for Zoloft follow Merck & Co.'s move to undercut generic-drug makers offering copycat versions of Merck's Zocor when it lost patent protection. Until recently, brand-name drug makers walked away from hit medicines once their patent exclusivity elapsed. But facing patent losses on drugs with $39 billion in sales over the next couple of years, as well as a scarcity of new drugs, more brand-name companies are tapping into the generics business to retain a sliver of sales and to weaken competition from traditional makers of generics over the long haul.|
|3||5180||2007||As sales for traditional soft drinks stagnate and Coca-Cola fails to fill gaps in the non-carbonated beverage market, some Coca-Cola bottlers are letting small beverage firms take advantage of their bottling and distribution networks. This allows bottlers to get a bigger share of the market and combat Coke's new tendency of distributing some Coke products to retailers itself rather than through traditional channels. Rival Pepsi has not encountered the same problem, largely because it offers a wider range of non-carbonated beverages.|
|4||5812||1997||Boston Chicken said its 15 franchisees are planning layoffs and expected to reorganize so that 4 of them will perform administrative and marketing functions for the entire group.|
|5||6029||2002||With banking, insourcing occurs when factories take on outside business to reach more efficient volumes. Nedcor, for example, has cut its credit card processing costs through an internal upgrade and now insources from a European credit card issuer.|
|6||6211||1991||In order to make use of services during slow demand times, American Express, parent of Shearson Lehman, markets a wide variety of services through its information services unit to firms that want to farm out data processing like billing for bank cards, hospitals and cable-TV.|
|7||7011||2006||Choice Hotels and 1-800-Flowers.com have an arrangement where they essentially rent call-center employees to one another. Choice and Flowers say is reduces their reliance on outsourcers, which can be 15 to 20 cents cheaper than U.S. based outsourcers. It also helps bolster recruiting and retention because call-center employees have more varied work and are less subject to a seasonal business cycle.|
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