Cost reduction techniques

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Cost reduction techniques

Article on Reducing Cost and Steel Usage for Large, Heavy, or Complex Parts.

Excerpts from the Book: Anderson There are many opportunities to reduce total cost in supply chains, which are responsible for many unnecessary overhead costs to generate forecasts, Cost reduction techniques inventory on-hand, generate purchase order inputs through MRP Material Requirement Planning systems, place purchase orders, wait for parts to arrive, expedite those that are late, receive and maybe inspect materials, warehouse, group into kits for scheduled production, and distribute within the plant.

These costly and time-consuming steps can be avoided with a spontaneous supply chain, which is able to pull in materials and parts on-demand. Spontaneous Resupply The concepts presented herein are labeled as the resupply of parts and materials as opposed to procurement or purchasing.

This is to emphasize that most of supply chain management is a resupply function of parts and materials that have been procured before. Most of the spontaneous part and material resupply will be automatic or manually triggered by production personnel, not by MRP and purchasing.

There are two aspects of the spontaneous supply chain: The Role of Standardization Identify the most common and least common parts by sorting usage in Pareto format.


Standardize on the most common materials, even if they are a higher grade or tolerance; the total cost savings in material overhead and purchasing leverage should compensate for any perceived cost increase. New products should be designed around these standard materials.

Existing designs could be converted for any "better than" substitutions. Unusual and seldom-used materials should be discouraged in product development and phased out after conversion on existing products.


For very flexible environments like lean, build-to-order, and mass customization, the standardization should be very aggressive. The effective procedures presented in the Standardization article should be used to aggressively standardize raw materials.

Cost reduction - Get cost saving by reducing manufacturing cost - cutting cost.

Standardization reduces the incoming variety which helps enable the spontaneous supply chain. Purchasing leverage and other material overhead savings compensate for any cut-off waste and for some products getting "better" material than they need.

Standardization can also protect a manufacturer from shortages, which are more likely to occur if production depends on many unusual materials. Raw materials could be automatically resupplied using the following techniques in order if increasing variety: Steady Flow of Standard Raw Materials.

The ultimate scenario for spontaneous resupply is to reduce the number of raw material types within each category to one, in which case steady flows can be arranged for each standard raw material.

Ideally, there should only be only one type of each material. Then forecasting multiple types would be unnecessary and "ordering" would be as simple as matching the tonnage in to the tonnage out; in other words, the incoming flow of the standard raw materials would be equal to the monthly consumption of the plant.

These will be used one way or another. Multiple types of materials in each category would allow the same spontaneity if the ratio is constant or predictable and usage is segregated if not, material changeover would have to be quick and hopefully automatic.

Raw materials can be cut to-length or to-shape on-demand from the longest version or standard sizes by programmable CNC Computer Numerically Controlled equipment, such as laser cutters and screw machines.Transportation Cost and Benefit Analysis II – Introduction Victoria Transport Policy Institute (

Cost –Reducing Strategies and Laboratory Management Techniques for Biology and Chemistry Teachers in The Gambia and Nigeria Object of the Study. Cost control and reduction refers to the efforts business managers make to monitor, evaluate, and trim expenditures.

These efforts might be part of a formal, company-wide program or might be. A Consumer’s Guide to Radon Reduction OVERVIEW Reduce RadonLevels in Your Home Radon is the leading cause of lung cancer for non-smokers and the.

Upon completion of this course you will be able to: Describe the models and strategies successful airlines use to compete in the market; Analyze the cost management, revenue generation strategies, and competitive techniques that have succeeded in today's marketplace.

A cost reduction programme should study the factory layout and the utilisation of the existing equipment to determine whether there is any scope for cost reduction by elimination of wastage of men, materials, and maximum .

Cost reduction techniques
Cost Reduction: Meaning, Techniques and Advantages | Organisation