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62 Cost Reduction Techniques

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Cost reduction is the process of optimizing or cutting costs. This may be done to improve efficiency or to endure periods of financial problems and constraint. Cost reduction has two primary types whereby you can cut overhead or unit costs. Overhead tends to be easier to cut but reducing unit costs at the same level of quality is typically a greater win. The following are common examples of cost reduction.
Automating work
Budget reviews and cuts
Bulk purchasing
Considering lifetime costs in purchase decisions
Consolidating hardware and equipment
Consolidating shipments to reduce shipping costs
Consolidating software and software licenses.
Cutting consultants
Cutting marketing costs
Cutting out the middleman
Delaying upgrades
Design to cost
Desk sharing
Dropping unprofitable customers
Economies of scale – achieving scale to lower unit costs
Energy efficiency
Expense approval processes
Hiring freelancers
Improved maintenance and repair processes
Increasing asset utilization
Just-in-time inventory
Negotiation practices
Paying down debt
Performance management for increased employee productivity
Process elimination – shutting down non-critical processes
Process improvement
Process optimization
Process re-engineering
Productivity tools
Purchasing used equipment
Rationalizing systems and technology
Reduced business travel
Reduced employee perks
Reduced research & development
Reducing bad debt expenses with tighter credit screening
Reducing consumption of office supplies
Reducing discretionary spending
Reducing fees such as payment transaction fees
Reducing hours and overtime
Reducing office space
Remote work
Renegotiating contracts and rent
Replacing high cost or low performing suppliers
Repurposing assets, systems and facilities
Retiring legacy technologies
Retrenchment – scaling back a business
Selling slow-moving inventory at a discount
Shared services
Shifting to inexpensive and low maintenance technologies such as cloud platforms
Supply substitution – switching to comparable products and services
Tax planning
Tighter expense policies
Value engineering – optimizing function to cost for projects
Waste reduction
Zero-based budgeting – no entitlement to budget based on previous budgets

Cost Reduction

This is the complete list of articles we have written about cost reduction.
Business Costs
Cost Cutting
Cost Advantage
Cost Goals
Cost Reduction
Cost Strategy
Cost Of Goods Sold
Economies Of Scale
Legacy Costs
Operational Efficiency
Overhead Costs
Process Improvement
Technical Efficiency
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