JPR

Jackson Productivity Research Inc.
Productivity is our middle name

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Our Productivity and Industrial Engineering Books, click cover for contents. Cost Reduction is a high powered book, full of good ideas. Industrial Engineering book includes the contents of Time and Motion Study, Layout, and Cost Reduction; but not Construction Piece Rates .


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Cost Reduction - A Vital Practice in any Economy
Does your business take cost reduction seriously? Chances are, you have already started. This page offers specific ideas on this difficult topic.

Specific cost reduction

First, please consider your entire organization, not just direct labor, to optimize results.

Second, platitudes and buzz-words alone won't do the job. Successful cost reduction requires a hands-on approach, literally a line by line analysis. Where to look? Start with the Pareto Principle applied to business, that predicts your top few line items will contribute the majority of cost and therefore the majority of cost reduction potential. Lets look also at a listing of the few major issues which cause the majority of costly problems; in the few items on these lists lie the potential for big time improvements.

Your business is unique, but these insights are often useful:

  • Find the highest value opportunities in your unique circumstances; show me the money. "Opportunity" combines both the overall cost and the potential actually to create an improvement .
  • Cut waste. Just what is waste? A March 2009 "Business Week" article presents this test:
    Will a customer pay for this activity?
    Will my service fail without this activity?
    Will I go to jail if I eliminate this activity?
    Answer "no" to all three, and the activity can essentially be defined as waste.
    Sounds good to me.
  • Find and manage constraints, bottlenecks, delays; that extend the cycle time of any activity.
  • Quantify expectations, measure performance, ask for accountability.
  • Cherry pick on the floor; look for delay, workload imbalance, high scrap.
  • Cherry pick at the management level, non-value added activity, inventory policy that causes changeover or out-of-stock. Match throughput to customer demand, match facilities and workforce to customer demand. Do your internal operating practices or paperwork interfere?

    Put cost reduction into effect

    The immediate needs for your organization will depend on the general economy, the particular sector of the economy in which you participate, and unique characteristics of the organization. You may need to survive, or to recover, or to thrive at different times of your existence. Ideas for cost reduction and for good management are mixed interchangeably, just as in real life.


    Time to act?

    Is a cost reduction project a do-it-yourself task? You tell me, has it succeeded already in your location? Everyone tries it, almost all have some success. Perhaps you have already picked the low-hanging fruit.

    An in-house do-it-yourself cost reduction likely is an ongoing affair, formalized. Bring a consultant in, and it becomes a big deal, outside normal practices, nobody knows what to expect. Just who is the expert, a hatchet man, a reviver of tired ideas or those with low potential; or a scrutinizer of the books?

    JPR will use Pareto to identify the top costs and inefficient issues, see above. Our value as a consultancy is to apply the appropriate industrial engineering tools or productivity principles. Our experience is summarized in the Cost Reduction book, my best I think.

    JPR adds value through books and articles, or through on-site visits tailored to the client's specific purposes, timing, and budget. But on-site assignments are most productive. JPR can do the job, contribute, lead, or teach as you prefer; tailored to your purposes, timing, and budget.

    Call and we can discuss the options, at no cost.

    Or please e-mail Jack Greene at jack@jacksonproductivity.com or