12. Cost Reduction Analysis

  1. Steven M. Bragg

Published Online: 13 DEC 2011

DOI: 10.1002/9781118268391.ch12

The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth

The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth

How to Cite

Bragg, S. M. (2011) Cost Reduction Analysis, in The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth, John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118268391.ch12

Publication History

  1. Published Online: 13 DEC 2011
  2. Published Print: 11 JUL 2011

ISBN Information

Print ISBN: 9780470912874

Online ISBN: 9781118268391

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Keywords:

  • check sheets;
  • cost reduction analysis;
  • Ishikawa diagrams;
  • spend analysis;
  • supplier consolidation analysis;
  • value stream mapping (VSM);
  • workforce reduction analysis

Summary

This chapter describes various techniques for cost reduction analysis, including spend analysis, supplier consolidation analysis, and workforce reduction. A cost reduction analysis project should start with a general overview of the target area that results in a graphical presentation of potential cost reductions. A spend analysis system requires the creation and enhancement of a spend database as the source of a spend analysis, followed by the gradual concentration of ordering volume with a select group of suppliers. Supplier consolidation activities should be based on the number of available suppliers and the dollar volume of goods purchased. A workforce reduction is designed to save money, but it may do the reverse in the short term, since there are a number of expenses associated with any workforce reduction. The chapter provides an overview of a number of analysis tools, including check sheets, Ishikawa diagrams, and value stream mapping (VSM).

Controlled Vocabulary Terms

Cause and effect diagram; cost reduction; value stream mapping