Reduce the Rate of Cost for the Input Used to Produce the Output

Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.

B. Reduce the quality of the input used by using a cheaper form of the input:

The reduction in quality should bring with it a reduction in the rate paid for the input.

Separate tasks into high and low skill levels and substitute low rate skills for some high rate skills

No.	Industry SIC	Year	Notes
1	3571	2005	In response to upstarts overseas, IBM is taking a new approach by betting that giveaways of precious technology will expand the market and boost its products sales to meet that new demand. IBM is looking for ways to cut the cost of delivering services, even high-value ones, by tightening the "services supply chain" – mostly meaning people. IBM has created a project called Professional Marketplace, a data base of IBM talent. So far it only contains profiles of 35,000 employees, but IBM plans for it to show the skills, location and availability of about 250,000 – all of IBM's services, software, sales, and distribution folks. It should help IBM ensure that it doesn't send an overqualified employee to a job that could be filled by someone who costs less.
2	4512	2003	During the past two years, US Airways Group Inc., which emerged from bankruptcy-court protection in March, has been pulling its big jets out of midsize cities and replacing them with less-expensive regional service. That meant the airline could change job classifications for baggage handlers, ticket-counter agents and other workers, and cut wages even under a union contract. Since those employees were handling only regional jet traffic, they were paid less, even though they were doing similar work.
3	5122	2004	Pharmacy benefit managers (PBMs) are under fire as they direct their customers to fill their prescription orders at mail-order houses instead of retail pharmacies. Walgreens, which gained 62% of its $32.5 billion in revenues just from filling prescriptions in the 2003 fiscal year, has initiated many responses to the competition from mail-order houses. To keep its prices low, the chain store uses pharmaceutical technicians, who are paid $16/hr, instead of pharmacists who get paid $42/hr. and by using technology that increases efficiency in filling prescription orders.
4	7372	2000	When the CEO of Serena Software took over, he expanded the company's telephone sales department because sales increase when the staff relies more on phone sales. Phone sales are also less expensive.
5	8021	2008	Dental therapists, people trained to perform basic dental work like drilling and filling cavities, are being met with mixed reactions. Alaska is the only state that allows dental therapists to practice and only on Alaskan Natives. Dentists who optimize in public health say that such training programs should be offered nationwide because some 100 million Americans can't afford adequate dental care. Other dentists, however, say that only fully trained dentists should be allowed to work on teeth to prevent substandard care.
6	8051	1993	For years, nurses have been taking on more tasks as procedures became more complicated or as they were handed off by physicians to save money and time. One nurse now gives patients special narcotics; 15 years ago, that was something only anesthesiologists did.
7	8712	2007	Faced with demands for construction and a short supply of U.S. architects, some companies are turning to India to meet demands. Cadforce Inc. has 150 designers and technicians in India which work on a variety of architecture tasks. Rather than developing complete designs, these workers often turn schematic drawings into blueprints and complete tedious but essential jobs. Their work is aided by the use of sophisticated computer tools.

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