Cost cutting ppt


Presentation Description

Cost cutting process in an organisation


Presentation Transcript

Slide 1:

By: Pradyuth Dutta, Kamal Dogra


Agenda What is cost cutting/reduction? Goals of cost reduction How to reduce cost? Cost reduction process Areas of cost reduction Advantages Precautions Examples on cost reduction


Meaning Measures implemented by a company to reduce its expenses and improve profitability. Cost cutting measures may include laying off employees, reducing employee pay, switching to a less expensive employee health insurance program, downsizing to a smaller office, lowering monthly bills, changing hours of service and restructuring debt.

Goals of cost reduction:

Goals of cost reduction Reduce the cost per unit Increasing productivity

How to reduce cost?:

How to reduce cost? Elimination of waste Improving operations Increasing productivity Cheaper materials Improved standards of quality

Cost Reduction Process:

Cost Reduction Process Analysis. Examination. Developing Solution. Selecting a Solution. Obtaining agreement. Set new goals Create options Evaluate options Implement Measures Vs Goals Continue Process

Areas of Cost Reduction:

1.Material Design. Purchasing. Storage. Transport . Production. 2.Labour 3.Production Areas of Cost Reduction

Slide 8:

3. Overheads Increasing the production volume. Extension of market and Price Differentials. Size of business units. 4.Outsourcing 5.Sales 6.Energy

3 Dimension of Cost Reduction:

1) internally Driven: Keep improving Processes Employee suggestion Programs 2) Externally Driven : Top of the technology and process 3) Competitor Driven: Benchmarking against competitors Real time data 3 Dimension of Cost Reduction

Tools and techniques of cost Reduction:

Value Analysis. Work study. Job evaluation and merit rating Quality control. Economic order quantity. Use of better technology. Standardization. Improvement in design of a product. Inventory Management and control. Tools and techniques of cost Reduction

Advantages of cost reduction::

To a particular concern Improves Profits. Improves Financial position. Improve competitive capabilities. Serves as index of efficiency To the industry One company serve as a trend setter for the other companies. To the Nation Efficient utilization of national resources High taxes can be levied by the govt. Retaining the markets and gaining the buyers Combating inflation Advantages of cost reduction:

Precautions in implementations:

Must be planned soundly. Appropriate to the organization. Requires coordination and cooperated efforts. Reluctance should be organized and dealt with. Programs should be clearly communicated. Should not have undesirable effects on external parties. Unnecessary cost can be reduced not eliminated. Is expensive and complicated to implement. Precautions in implementations


Freeze in hiring. Personal awareness to cost. No bonuses or pay hikes. Night home drop and pick. Reducing off shore training. Outlook comm. Used in place of bharti. Microsoft


The share ownership plan discount Scrapped. Reducing work hours of trainee. Delay in fresher joining the company. Pay cut of 5% Annual shutdown of a week extended to a fortnight. HP


Shutting down old fabrication units. Freeze in hiring. Reduced Travel Expenses, Using video chats and voice chats as alternatives. Reducing / reusing inventory. Increasing personal awareness. Intel

Bombay dyeing:

Introduction of new effective technology. Process re-aligning. Re-Engineering of product. Restructuring of work force. Rationalizing Input cost. Bombay dyeing

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