This course is most relevant now because Nigeria at present is a truly tough economy, an environment where cost efficiency must simply be a matter of common sense. The whole organization and all levels of management should master it.
Generating substantial revenue from pre-existing business elements as well as understanding competitive cost reduction is now a viable strategy. Cutting costs and managing margins is generally a more predictable and controllable way to maximize business profits than growing sales, particularly in this depressed economy.
Every naira saved from cost goes directly to the bottom line. Costs directly linked to product quality, excellent customer service, or your defined competitive edge is strategic.
Whatever fails to conform to the above stands to be considered an overhead?
Introduction: Cost Reduction vs Cost Control
- Supply and Demand Analysis
- Comparative data from the industry
- Reviewing cost of sales
- Reducing supply costs
- Seasonality effects
- Change the product mix to get rid of costly items
- Shopping Smart
- Office supplies
- Raw materials and consumables
- Production equipment
- Trained procurement officer
- Utilize bulk discount opportunities
- Vendors - best allies when implementing cost reduction strategies.
Service and Transaction Charges
- Monitor bank charges
- Streamline the purchasing processes
- Minimize freight charges.
- Inventory Management Optimization
- Automate to reduce back office labour expenses
- Work at Just-in-Time delivery
- Efficient space utilization through warehouse layout modification
- Prudence about lines with regularly poor sales
- Vendor managed inventory systems (VIM)
- Vendor stocking programs (VSP)
- Common supplier joint procurement policies.
- Employee Productivity
- Implement Quality Management System
- Deal with bloated overhead
- Automate business processes - reduce paper flow.
- Annual review of contracts for major suppliers bids
- Stop new headcount for growth
- Create and adhere to a monthly budget
- Challenge every expense
- Set approval levels
- Flash report to directly measure cash, profits
- Tools of Technology, lean techniques, process engineering