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How to reduce costs in your company?
Cost reduction in a company is primarily associated with reducing incurred expenses. Companies deciding on savings activities are often already affected by low profitability and lack of financial liquidity. It is better to prevent such situations early enough and reduce costs in the following ways.
Cost reduction activities in a company should start with optimizing our process. This applies to business
production and services.
1. Kaizen
– we improve the company’s operations by striving to achieve the following goals:
• shortening the time of work process execution and improving quality,
• technical adaptation of system elements,
• creating evaluation and reward criteria,
• cost reduction,
• improving the ergonomics of workstations.
2. Kanban
- the idea of Kanban can be most briefly described by the slogan "7 x none":
OUTAGES, DELAYS, INVENTORIES, QUEUES – anywhere and for anything, INACTIVITY,
UNNECESSARY TECHNOLOGICAL AND CONTROL OPERATIONS, MOVEMENTS.
3. 5s
– in this method we take care to maintain a well-organized and safe workstation.
SORTING, SYSTEMATIC, CLEANING, STANDARDIZATION, SELF-IMPROVEMENT
cost reduction in the company
By using the above tools, we can easily "slim down" and optimize our current production processes. With the right tools, we can more effectively reduce costs in the company.
WRESTLING
When running a manufacturing business, we should consider stockpiling, which freezes our capital. On the other hand, stocks are often a necessity to ensure continuity of production and availability of our products on the market. In this difficult issue, various known methods of stock control are also useful, such as:
Just-in-time
whose message is the influence of materials only when it is
necessary.
ABC method
grouping inventories (or manufactured products) into 3 categories: important, less important and
Never mind.
The 80/20 rule
which divides the stocks by value: 20% of the assortment is 80% of the total
inventory value.
XYZ Method
a complementary method to the ABC method, in which inventories are grouped according to their regularity
demand and forecasting accuracy: regular, fluctuating and sporadic.
OUTSOURCING
The use of outsourcing will allow us to relieve our business of tasks that we have performed so far, but which were not fully optimized. Ultimately, a given function will be taken over by a competent entity, thus relieving internal organizational structures that can focus on business priorities. An example of this action could be a virtual office, which allows the company to reduce costs, such as those generated by the lease/rent of the company's headquarters and handling correspondence. More information about outsourcing can be found on our blog:
BAD PRACTICE
is to cut costs by reducing or delaying payments on the back of employee salaries, who are the backbone of our business, therefore an important step is to analyze and change the current pay system. Pay rises and bonuses affect employee motivation and efficiency, and this can ultimately translate into higher revenues. By taking care of our employees, we gain their trust, thanks to which they stay with us for a longer time, and our company thus avoids costs related to new recruitment and enjoys good opinions. Additionally, an entrepreneur should not lower the quality of goods or services performed. We should also not look for savings in the equipment used in our business
Of course, there are many other, smaller methods of reducing costs. However, in our
In this article, we focused on the most important ones. We hope that this knowledge will encourage you to analyze
your businesses. Maybe you can even implement some of the ideas.
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