Brainstorming Ideas: 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%.

G. Expand in-house ICDs to reduce rate on purchased ICDs:

Sometimes it is better for the company to increase the activities (ICDs) inside the company in order to reduce the effective rate paid on purchased ICDs. This occurs when the price on purchased ICDs is high enough to allow the company to make a return on its investment by producing the same ICDs in-house rather than purchasing them from third parties.

Create rather than license designs and products

No.	Industry SIC	Year	Notes
1	2499	2003	Designs usually are copyrighted. Therma-Tru has patents on many of its production processes
2	2834	1999	Ivax Corp. has developed a new patented inhaler, Easi-Breathe, for delivering asthma medicine. Glaxo-Wellcome, the world leader in respiratory drugs, has licensed Easi-Breathe for four of its drugs.
3	5311	1999	Four years ago Pottery Barn decided to stop sending buyers to far corners of the globe to seek out unique ceramics in Italy or carpets in India and hired one designer to sketch out Pottery Barn's own merchandise.
4	5311	1999	Borrowing from its huge San Francisco-based neighbor the Gap, Williams-Sonoma is gradually bringing the design of most of the company's thousands of products in-house, rather than merchandising outside brands.
5	5411	2008	Tesco PLC opened its first stores in the U.S. last month, using Dunnhumby Ltd., which also works for Kroger Co., to fine-tune its offerings to shoppers' needs. Dunnhumby analysts don't create profiles of individuals, but use individual buying records to make patterns and group shoppers into segments. Those categories such as "budget-conscious" or "family-focused" help Kroger to design its stores and mail coupons for products customers have already bought, and, based on others in the segment, might buy in the future.
6	5411	2008	Tesco PLC opened its first stores in the U.S. last month, using Dunnhumby Ltd., which also works for Kroger Co., to fine-tune its offerings to shoppers' needs. Tesco is considering opening Fresh & Easy stores nationally. The stores are smaller than typical supermarkets and sell store brand food, like Trader Joe's, but at even lower prices.
7	5621	2008	Warnaco, a design and marketing company for clothing and accessories, is signing for more new and long-term licenses for Calvin Klein properties. Warnaco sells brands of intimate apparel, swimwear, denim jeans, sportswear, and accessories. Its products are sold under such owned and licensed brands as Calvin Klein, Warner's, Speedo, and Olga. They're distributed mainly to wholesale customers like department stores and mass merchants.
8	5961	1997	The three catalogs that the company distributes, MacMall, PC Mall, and DataCom Mall, are created in-house with the company's own design team and production artists using a computer-based desktop publishing system.

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