Brainstorming Ideas: Reduce Unique Intermediate Cost Drivers in Process

Reduce unique ICDs by redesigning the product or the process. The objective of this activity is to reduce the number of ICDs by reducing the occurrence of an ICD in producing a unit of Output, or by reducing the number of separate ICDs used in the Output. A unique ICD is one of the key activities in the work center’s contribution to the final product (O). It is separate and distinct from any other activity in the work center. For example, the fastening of a part onto a subassembly and a quality control check of the subassembly would be unique ICDs.

C. Eliminate customer activities with low value to the customer

Reduce ICDs by eliminating activities for which customers either will not pay or will not pay enough to cover their costs.

1. Warnings and advice

2. PRODUCTS AND SERVICES

1. Products selling slower than average Examples>>
2. Products that have become commodities Examples>>
3. Products producing losses
   1. Due to low revenues
      1. Low purchases per thousand populations Examples>>
      2. Elastic demand falls as prices rise Examples>>
      3. Product late to the market Examples>>
   2. Due to high costs
      1. Competition with more focused cost structure Examples>>
      2. Inefficient capital structure Examples>>
      3. Volatile costs without hedging opportunities Examples>>
      4. Excessive marketing and sales costs Examples>>
      5. Excessive costs of service Examples>>
4. Other Example>>

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