ReducingBusiness Costs
Cost reduction is an important factor inimproving the state of a business. It can obviously result in higher profitsand a stronger enterprise. Most business leaders and managers would like toreduce costs, but many find it difficult to do the right things.
There are several methods business leadersor managers use to reduce costs that can be damaging to the health of theorganisation. These include downsizing, reducing customer service, and cuttingcorners in production methods.
Downsizing
Some company leaders feel they can reducecosts by simply downsizing or reducing the number of workers or middlemanagers.
If this is done after applying ISO 9000 anddefining the exact role of everyone, it may be a necessary and effectivemethod. Unfortunately, most companies that downsize do so without reallyknowing the impact on the company's operations.
One of the biggest effects of downsizing toreduce costs is that the good employees quickly leave the company for greenerpastures. Thus the company is left with the deadwood employees, who aresupposed to do twice the work as before.
Reducing Customer Service
Customer service can be a nuisance and isoften expensive. Sometimes companies will reduce or eliminate the service theygive to the customers. Unfortunately, a neglected customer is an ex-customer.
Cutting Corners
A quick way to cut costs is by cuttingcorners in production or service methods. Some company leaders feel that byusing cheaper materials and labor, and by eliminating part and steps, they cancut costs and save money.
It is true that costs may be cut in theshort run, but often the product or service is of such a low quality thatrepair and rework costs go through the roof. Also customers may become unhappywith the low quality and move on to another supplier.
Effective ways to reduce costs includetraining your workers, getting quality goods from suppliers, and using TotalQuality Management (TQM ) tools. Because to reduce costs means to reduce waste.That is wasted materials, wasted effort, and wasted time.
Train Workers
In these days of changing technologies andmethods, it is necessary to train your workers to keep them up to date.
Get Quality from Suppliers
Low quality goods from suppliers is a majorsource of waste. You should not only try to get quality suppliers but also workwith your suppliers to help them improve their operations and quality ofoutput.
TQM Tools
There are a number of improvement methodsthat can be placed under the umbrella of Total Quality Management (TQM).
In conclusion, crude methods to reducecosts - such as downsizing- are not effective and can actually harm a business.Helping your suppliers, training your workers, and using TQM-type improvementtools can help to eliminate waste and improve the profits of your business.
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