Costs: Brainstorming Ideas to Reduce the ICDs Used to Produce Your Output

Here's What's New on StrategyStreet

We have upgraded the Improve/Cost Management section of StrategyStreet, where we provide brainstorming ideas to help you reduce your costs. Specifically, we have streamlined our ideas and added many new examples in the third method of improving productivity.

There are four approaches to increasing a company’s productivity, measured by the units of Input over the units of Output. The third of these four approaches calls for the reduction of the Intermediate Cost Drivers (ICDs) used to produce the product Output.

In this new outline, we describe the major approaches to reducing the number of ICDs:

• Redesign the product to use fewer Intermediate Cost Drivers. The presumption here is that the newly redesigned product would be acceptable to the customers. This redesign might include reducing performance standards or changing the components making up the product.

• Redesign the process of producing the Intermediate Cost Drivers, or the Output. This very extensive set of ideas includes several hundred examples of approaches to design Intermediate Cost Drivers out of the process. These ideas include such things as shifting work to others, automating the process, reducing the movement of people and items, and many other ideas.

• Eliminate activities with low value to the customer. This approach includes eliminating Intermediate Cost Drivers by dropping products and services, businesses or customer segments that apparently have low value to the company and its Core customers.

This new brainstorming outline offers many more concepts and examples than our previous version.

We hope you find these new brainstorming ideas of help in managing your costs. Go to www.strategystreet.com and use the navigation bar to visit the Improve/Costs/Brainstorming Ideas section of the site.

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