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Cost Reduction Strategies – Methods to Increase Savings and Productivity

Quite a number of business strategies are available to help reduce costs and gain more in the corporate world. These may include streamlining of the manufacturing process, seeking for discounted purchases, or increasing the cash flow.

Cost Reduction StrategiesPHOTO BY FLICKR.COM/BRETT JORDAN

Cost Reduction Strategies - Trimming Down Business Expenditures

One of the areas where effective cost reduction strategies can be applied is the manufacturing aspect. Wastes can be avoided by quarterly re-evaluating the readily available material inventory thereby purchasing only what is needed according to the present sales projections. Some of the other essential cost reduction strategies focus on the purchasing activities and payables of the business. The latter may involve talking to suppliers about offered discounts especially the markdowns given based on volume so that consolidated vendors will be considered instead of making costly multiple purchases, while the former may involve the use of incentives such as providing small discounts to the customers who pay early so that invoice financing costs can be lessened.

Cost Cutting Ideas - Employees’ Contribution to Save More

Some of the cost cutting ideas that encourage employees to be part of the cost-saving endeavor are by letting them trim down supply and utility costs. Supply expenses can be lessened through the use of lesser papers by eliminating memos or paper checks, making use of office manuals in PDF files instead of printing several copies, as well as asking the employees to communicate over email instead of letters. Saving on utilities, on the other hand, may involve encouraging the members to set their computers in sleep mode or turning it off if not in use, setting the lightings on a timer, and installing low-flowing faucets or toilets. Other cost cutting ideas may include travel reduction and equipment maintenance.

Cost Reduction Techniques - Money Saving Methods

Using independent contractors instead of hiring employees is one of the efficient cost reduction techniques that businesses can employ. Here, costs are reduced by not having to pay for their payroll expenses, office space, and extensive trainings. Cash-back credit cards are effective too since it allows the company to regain some percentage of the money being spent based on the volume of purchases made. The other cost reduction techniques include purchasing alternatives such as considering the lease of office equipments or opting for reconditioned ones instead of buying new devices. Finally, learning the negotiation skills can also be an asset to further reduce pricing costs.

Written by Katherine Murphy

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