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Sunday, November 15, 2009

Quick Cost Strategies

Cost Saving – every producer of commodity goods must relentlessly pursue the lowering of operating costs without top line price increases. It is a key to the future of a company’s sustainable future.

A company that is weighted heavily on the ideas and low on execution then optimal savings will not be achieved. Evaluation of resources is critical in achieving the savings that are in every organization.

"If we all did the things we are capable of doing, we would literally astound ourselves." - Thomas Edison

Entering an organization you practice the skill of listening. The behaviors of the team will signal where the savings are hidden. And they are not really hidden. The following is a list of signals that you can identify an organization ripe for savings opportunities in a short time period:

- Ideas are shared with no action plan
- Routine manufacturing procedures without documentation
- Excessive overtime – creativity of talent is dulled
- Turnover

Listening and building trust will achieve the identification of savings that can be sustained. To ensure execution assign a champion to drive savings. The champion will focus on the savings, ensuring the lowering of the company’s cost structure. A few keys to savings:

- Evaluate and understand full capabilities of company
- Empower employees
- Metrics – assign a metric that every employee has personal accountability and post within the company.
- Quality – there is no replacement – rework is a killer

“Don't tell people how to do things, tell them what to do and let them surprise you with their results.” ~ George S. Patton

The optimization of costs is relentless and pushing in the right direction will lead to the next level – compete further on price.

Brett Vanderwater, MBA, CIA, CMA, CTP