Cost reduction means conducting some innovations in the way of working in a new style, so that the excess costs of production and operation could be eliminated. Cost reduction programs are directed toward specific efforts to reduce costs by improving methods work arrangements and products. Cost reduction can be made in different areas and stages of production, storing and distribution process by applying more advanced and scientific techniques of operation. So, a cost reduction program needs a research and development activity.
Cost reduction programs may require a bulk amount of research and development budget, but once a new technique is introduced, it gives competitive advantages for the long period.
The aim of cost reduction is to see whether there is any possibility of bringing about a saving in the costs incurred on materials, labor, overheads etc.
Cost reduction is possible through the following improvements:
* Obtaining more outputs from the same inputs and facilities.
* Using a lesser quantity of inputs to obtain the same output .
* Simplifying the methods of distribution.
* Improving the location and layout of plant, warehouse and other resources.
Cost reduction programs may require a bulk amount of research and development budget, but once a new technique is introduced, it gives competitive advantages for the long period.
The aim of cost reduction is to see whether there is any possibility of bringing about a saving in the costs incurred on materials, labor, overheads etc.
Cost reduction is possible through the following improvements:
* Obtaining more outputs from the same inputs and facilities.
* Using a lesser quantity of inputs to obtain the same output .
* Simplifying the methods of distribution.
* Improving the location and layout of plant, warehouse and other resources.
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