Big We and little I

Big We and little I

Introduction

Cost cutting and cost reduction have become a necessity for almost every organization around the globe after the recent economic turmoil. The purpose of developing strategies for cost reduction is not to limit the vital resources of the organization and cripple it, but to make smarter decision to control extra cost which is not affordable anymore for organizations. This goal is achieved by organizations by doing comprehensive planning and evaluation. Due to the dynamic nature of all the industries today it's important to make the decisions at a rapid pace. This fast paced decision making mostly result in bad decisions as the decision makers don't pay much attention to minute details.

Discussion

Reducing costs in the business is the product of various activities undertaken by management. Unfortunately in many companies the cost cutting is done by cutting expenses, finding between the actions typical dismissal of staff, restructuring and reduction of suppliers. This type of attitude causes disruption of the process and results in decline in quality. But in today's markets customers and consumers demand better quality at a lower price and faster delivery, which can also be formulated as a higher relationship satisfaction (quality + service) / price. When management focuses its activities only in search of lower prices, it simply comes to reducing costs; they discovered that both the quality and timely delivery are severely affected by this attitude.

Thesis Statement: Employees play a key role in achieving organizational goalsManaging costs in the business involves:

The cost planning aimed at maximizing the margin between revenues and costs.

The systematic reduction of costs.

The investment planning by senior management.

The possibilities of reducing costs can and should be expressed in terms of extravagance and waste.

The best way to reduce costs in the business is through the detection, prevention and systematic elimination of excessive use of resources.

To reduce costs, it must be implemented simultaneously in seven activities, of which the improvement of quality has the most important, and the other six activities should be considered as part of the process quality.

The activities that we mention are: 1. Quality improvement. 2. Improvement in productivity. 3. Inventory reduction. 4. Shortening of the production lines. 5. Reducing idle time of machines and equipment. 6. Reduction of space used. 7. Reducing the total cycle time.

Quality Improvement

Improving quality is essential to begin to reduce costs. Improving the quality of work processes as a result generates fewer errors, defective products and rework, so shortening the total cycle time and reducing resource consumption, so diminishing the costs of operations. A company that claims to be competitive internationally should aim to achieve a quality level that is six sigma, which means to reduce mistakes and errors to a level of 3.4 DPMO (defects per million opportunities).

What is at stake is not only reaching the end customer with products free from defects, but also to generate these products, "the first", which involves production processes with the ability to produce goods and ...