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Assume that you are implementing cost-cutting in your company.
Please suggest based on your experience.
Do the following
Review company policies
Ask for employee input
Look at your own spending
Take your time
Measure performance
And at the same time also Don't do the following
Forget the training
Play favorites
Remove all the perks
Forget some padding
Take it personally
Do review company policies
Many companies have company policies with regard to costs. They could range from the amount an individual is allowed to spend without additional authorization to the policies regarding company credit cards. It is a good idea to review these policies and make sure they still apply. If you are seeing an increase in the amount of discretionary spending, it may be time to lower the amount an individual can spend without additional authorization.
Do ask for employee input
When it comes time to make cuts, the people on the front line are the most knowledgeable about where cuts can and can’t occur. Ask for their input. You could even put a program in place to reward employees that come up with significant cost-saving ideas. Involving employees in department decisions allows them to feel important and have skin in the game. The amount spent on the program will be minimal when compared to the overall savings.
Do look at your own spending
As managers move up through an organization, they have a tendency to expect some benefits with the title. Whether it is a dedicated assistant, company car, or expense account, these benefits cost money and impact the company’s bottom line. Take a look at your expenses and see if there are areas where spending can be reduced. Do you need a dedicated assistant or could you and another manager share one? Can you reduce your expense account? By taking a look at your own spending and making reductions where you can, you are not placing the entire burden solely on your employees. By sharing the burden, you are showing that you and your employees are truly a team
Do take your time
An annual budget isn’t something that should be put together at the last minute. It takes time and effort to create a budget that will allow you and your team to perform effectively, efficiently and at the lowest cost possible. Be prepared for the process by putting together your expenses for the current year as well as any unknown expenses and initiatives for the upcoming year.
Do measure performance
Compare your actual spending to your budget on a monthly basis. By doing so, you will be able to easily identify any areas where you are over-spending and address them before they get too far out of control. You should also communicate these metrics to your employees so that they are aware of how the team is doing.
Do not forget the training
Many times training is one of the areas that is minimized during the budgeting process. However, a well-trained workforce is critical to maintaining your levels of quality and reducing turnover so don’t take it for granted that you can just slash the training budget to get your spending under control.
Do not play favorites
When identifying areas for cost reductions, the team and all of the related costs as a whole should be reviewed equally. Many times a manager has a pet project or program that they are unwilling to even consider for a cost reduction. Each project and program should be evaluated for possible reductions. Not only will this make all of your employees feel equal, but it will make everyone more cost aware when it comes to spending.
Do not remove all the perks
Happy, engaged employees are important to the success of any company. Company perks play an important role in keeping your employees happy and engaged. When you are considering removing employee benefits to reduce costs, you need to also take into account any impact this would have to overall employee morale. A reduction in employee morale can turn into employees leaving the company which may cost you more money than the benefit you reduced.
Do not forget some padding
No one can budget for all costs that may occur during a given year. Equipment may fail, an employee may quit both of which are unforeseen and can have a financial impact. So when putting together your budget it is a good idea to include some additional dollars to handle these unexpected situations. By doing so, you are covered if something occurs, and if not, you can come in under budget.
Do not take it personally
During the budgeting process, there are going to be tough decisions. You are going to win some and lose some so it is important to view all of these decisions as business and not personal. Many times managers are only concerned with their budget as they are developing it for the upcoming year. By changing that mindset and focusing on your actual costs and adherence to your budget on a regular monthly basis, you will be able to quickly address areas where you are over or under spending.
Ultimately, you will end up (hopefully) cutting extra fat in the body of the organization not the muscles that keep it moving, and not the critical organs inside that keep it alive
reduce wastage
unwanted stationary or excess usage of stationary
prompt and full utilization of available resources in optimal manner
with out any overtime expenses.
few points generally can go for cost cutting i can think of. Thanks.
First, take a look at costs to see where they are-look for areas in which you can make a difference. so, depends on what type of office, size, etc., but here are some ideas -
encourage people to print double-sided-this obviously has the potential to cut printer paper costs in half! (go to windows control panel/printers)-each person sets this up and it can be easily changed for jobs they must print single sided also, set up jobs to not print a cover page if possible
lock the supply cabinets-surpising how much less you will use.
set up a system for reusing old file folders,3-ring binders, or other filing type items.
don't order new furniture unless absolutely necessary-look around first for unused tables, chairs, file cabinets, etc. and you can hiring a maintanance staff in your office to repair the damaged furniture and then return them to the service
shop around for the lowest prices on office supplies, and if your current supplier won't match or at least give a better deal it or doesn't offer another reason to stay, change suppliers
Fixed costs - renegotiation of constant cost, such as rents, business rates, insurance.
salaried permanent staff - re new contracts, with more emphasis on performance related pay as opposed to set pay for set hours. Look at potential redundancies.
Variable costs - Audit your supply chain and look for better value - if necessary from new sources
Review staff training and analyse staff productivity and efficiencies.
Personnel Management
Motivation Are you getting the best from your staff?
Improve products and services - thereby increasing turnover and reducing cost as a percentage
Areas of Cost cutting:
Production Process simplification through business process re-engineering will reduce manpower cost, time cost and logistics cost.
Strategic procurement decisions involving wide range of vendors and getting competitive price will reduce cost.
Accurate delivery time without stock out will reduce storage cost and investment cost.
Innovative marketing ideas will reduce traditional marketing cost
A through review of he distribution channel will reduce the distribution cost
Finally, a good manager must initiate management control systems to ensure cost cutting without compromising the cost of the product or servciess
Keeping the track on the work schedules and plans timel completion without repeat ion of works
expenses require to reduce. Like Printing stationery, other stationery. reduce overtime and increase productivity but it should be on practical stage. In production wastage should not go beyond normal limit. Stock should be in control.
Major areas for any cost cutting are :
1) Money : By investing small amount of money initially and after satisfaction whole amount can be invested. This will allow no wastage of money.
2) Manpower : By reducing the number of helpers, riggers, technicians etc. that we have hired. This can be achieved by giving some more work to them in same limited period of time.
3) Resources : Such as cranes, hydra, dewatering pumps etc. can be reduced by either purchasing them instead of renting them or by using one equipment for many jobs. For example hydra can be used in place of crane and forklift. Hence having hydras are more advantageous than having cranes.
4) Management : Bringing the awareness of cost cutting in other employees by training them will definitely cut the high cost.
5) Material : By keeping the common inventory, bringing the principle of zero inventory and following the latest inventory control tools will definitely reduce the cost.
for cost cutting will start from daily expenses. inappropriate exp or excess expenses require to reduce. Like Printing stationery, other stationery. reduce overtime and increase productivity but it should be on practical stage. In production wastage should not go beyond normal limit. Stock should be in control. so that working capital free and not require to use more bank facilities for excess stock. Production loss to be reduce by proper follow up.
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