Manage Costs

Step 4. Develop a New Cost Structure

The Improve Costs section of StrategyStreet helps any functional cost center manager reduce the unit cost of producing Intermediate Cost Drivers by increasing the Productivity of the Inputs used to yield the final Outputs. The focus of the brainstorming ideas in this section of StrategyStreet is the reduction of physical units of Input costs needed to produce physical measures of Outputs for customers. This work assumes that the Company has a clear statement of the benefits that each functional cost organization must provide its customer.

There are four basic approaches to reducing unit costs:

• Reduce rates paid for the Input

• Reduce available units of Inputs not producing Output

• Reduce unique Intermediate Cost Drivers by redesigning the product or the process

• Increase the Output over which an Intermediate Cost Driver is used

You may review an explanation of these activities by clicking on the Directions page for the Improve/Costs section of StrategyStreet. After reviewing these steps, click on the “back” button in order to return to this page.

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