A company’s products, culture, structure, employees, suppliers, investors and markets all combine to make the cost reduction scenario unique to the situation. Because of this, development of any cost reduction strategy requires specific attention to the unique details uncovered during an initial discovery period.
The cost reduction plan should be 'sold' to the company at large based on the business case, but be prepared to proselytize those who usually fit into three common protest groups:
1. The people who don’t believe in the Business Case:
- They should be involved in developing the business case.
2. The people who should have come up with the idea or plan in the first place - as ‘its implied in their job description’: - These people need to be involved in the planning process to gain authorship and ‘save face’.
3. The people who are overly conservative or unknowledgeable or those who’s uncertainty and hesitance causes a need to ‘buy certainty’ by spending more time and money analyzing the situation in order to further reduce risk: - Make them part of planning and solution analysis.
The resulting process must fit the corporate culture and strategic plans and not be hastily imposed like a Fad of the Month. Results should be constantly monitored and given to those immersed in, or concerned about the process.
Sometimes a corporate culture may need encouragement to include cost reduction as a new component in its product cycles.
Conclusion -
The Devil is in the details ...
This article provides a guideline and some tips for developing a cost reduction program. However, the proof is not in the recipe, but in the cooking. Not only corporate ‘will’ and planning are required, but experienced investigators and implementers are needed to ensure that the program is effectively designed and executed. However, implementation is not easy to quantify in general; unfortunately, details are lacking because of the need for specific information. Nevertheless, following are some specific areas to consider as cost reduction targets:
|
JUMP TO PAGE
1 2 3 4 5 6 7
© R. M. Haney, 1997
|
