Cost Reduction Management

OVERVIEW

In a crisis, reducing costs is vital for survival. Businesses that cannot control their costs will not stay in business. As managers and budget holders, you need to be aware of costs, manage them effectively, and maximize opportunities to reduce them. This program will give you an in-depth understanding of what the true cost management is. It will show you the importance of being cost-conscious and reducing costs through good design and efficient operating practices while taking continuous action on overspending.

OBJECTIVES

After completing the program, participants will be able to:

• Optimize cost reduction using structure and strategies
• Leverage existing cost avoidance with sustainable measures that have longer-term impact
• Improve vendor management and evaluation for greater outcomes
• Minimize supply chain disruption (proactive planning and risk management)
• Establish and utilize procurement outsourcing and offshoring to your benefit
• Quantify buying processes, best practices, and systems (templates, forms, and contracts)

TARGET PARTICIPANTS

This program is essential for managers and budget holders from across industries.

COURSE CONTENTS

1. Establish a Cost-avoidance Culture

• Sources of unnecessary costs
• Cost and changes over time
• Cost creep
• Establishing a cost avoidance culture

2. Developing a Cost-reduction Strategy

• Cost leadership
• Identifying savings targets
• Quick wins
• Step change and continual improvement programs
• Company turnaround situations
• Cost monitoring
• Accounting strategies for cost reduction
• Cost controlling strategies: existing products and new technologies
• Cutting costs: implementation techniques
• Strategy implementation

3. Cost Analysis Tools

• Pareto analysis
• Understanding cost drivers, trends, and dynamics
• Cost segmentation

4. Managing External Expenditure

• Global sourcing
• Maximizing leverage
• Purchase price and cost analysis opportunities
• A process-led approach
• Total cost of ownership analysis
• Generating sustainable benefits

5. Managing Supplier Price Movements

• A systematic approach
• Cost transparency
• Reverse auctions
• Learning curve
• Pitfalls of price variation formulas and contract price adjustment

6. Value Chain Analysis

• Value chain mapping to identify cost improvement opportunities
• Process improvement tools
• Examples of successful use
• Change control

7. People Costs

• The true cost of labor
• Focusing on the value-added
• Technology and productivity
• The folly of slash-and-burn approaches
• Sub-contracting and outsourcing
• Performance management: strategies for effectiveness

8. Outsourcing and Offshoring

• Identifying outsourcing opportunities
• Critical cost management factors
• Managing costs going forward
• Finding suitable partners
• Maximizing opportunities
• Pitfalls to avoid
• Contract considerations
• Managing service providers

9. Overhead Cost Reduction

• Value analysis and engineering
• Business approaches re-engineering
• Automation

10. Demand Management, Forecasting, and Inventory Management

• Sales and operational planning processes
• Collaborative planning
• Consensus forecasting
• Consignment stock
• Vendor managed inventory
• Order penetration point analysis
• Lean and agile thinking
• Dependent and independent demand for stock items

11. e-Commerce

• Reduction in transaction cost
• Improvements in time and cost to market
• Efficient customer response
• Disintermediation of the supply chain

12. Soft Targets and Quick Wins

• Strategies for finding and delivering quick wins
• Areas which typically yield quick wins
• Soft targets