For all other managers, the scheme for making a profit is extremely simple:
Profit = Gross income (turnover) - Expenses (distribution costs)
It doesn't take a math genius to see three ways to increase profits:
to raise trade turnover, while leaving expenses at the same level;
reduce costs at the same turnover;
increase gross income, reduce costs.
The third way is the most profitable for any owner, but it requires skills and serious knowledge. In practice, most entrepreneurs, intending to increase their revenue side, start by increasing their advertising costs and other marketing tools, without analyzing or managing their monetary resources. The fussiness of actions, as usual, leads to patching holes and the formation of a heap of new problems. Most often, for such careless owners, the next stage of "debriefing" is to find the guilty and punish them.
In two of the three proposed ways to increase profits, reducing costs can significantly affect the amount of net income. Our portal has already written about the reduction of distribution costs - Reducing distribution costs: sources of profit in the company.
Profit becomes unmanageable if cost control in the enterprise is not put to the proper level. Each item in the expenditure side of the balance sheet must be analyzed and minimized.
The break-even activity of the company is calculated using the formula: Gross profit = The sum of all expenses. Breaking even is a major milestone for new ventures, with a quick start to making their first profit. However, a break-even activity cannot positively characterize an enterprise that has been operating for a long time: if the company does not make a profit, it becomes bankrupt.
In the direct analysis of the actual cost of manufactured products, identification of reserves and the economic effect of its reduction, a calculation based on economic factors is used. Economic factors most fully cover all elements of the production process - means, objects of labor and labor itself. They reflect the main directions of work of collectives of enterprises to reduce costs: increasing labor productivity, introducing advanced equipment and technology, better use of equipment, cheaper procurement and better use of labor items, reduction of administrative and managerial and other overhead costs, reduction of rejects and elimination of unproductive costs and losses. ... Savings resulting in the actual cost reduction are calculated according to the following composition (typical list) of factors:
Raising the technical level of production. This is the introduction of new, progressive technology, mechanization and automation of production processes; improving the use and application of new types of raw materials and materials; changes in the design and technical characteristics of products; other factors that increase the technical level of production.
For this group, the standard analysis of the impact on the cost of scientific and technological achievements and advanced experience. For each event, an economic effect is calculated, which is expressed in reducing production costs. The savings from the implementation of measures are determined by comparing the cost per unit of production before and after the implementation of measures and multiplying the resulting difference by the volume of production in the planned year:
E = (SS - CH) * AN,
where E is the saving of direct current costs
CC - direct current costs per unit of production before the implementation of the event,
СН - direct current costs after the implementation of the measure,
AN is the volume of production in natural units from the beginning of the implementation of the event to the end of the planned year.
At the same time, the transitional savings on those measures that were carried out in the previous year should be taken into account. It can be defined as the difference between the estimated annual savings and its part taken into account in the planned calculations of the previous year. For activities that are planned for a number of years, the savings are calculated based on the amount of work performed with the help of new technology, only in the reporting year, without taking into account the scale of implementation before the beginning of this year.
Cost reduction can occur when creating automated control systems, using computers, improving and modernizing existing equipment and technology. Costs are also reduced as a result of the integrated use of raw materials, the use of economical substitutes, and the full use of waste in production. A large reserve contains the improvement of products, a decrease in its material consumption and labor intensity, a decrease in the weight of machinery and equipment, a decrease in overall dimensions, etc.
At the stage of express reduction, a decision is made to immediately stop financing those items of expenditure that management considers unacceptable given the current financial position of the enterprise. The following sequence of actions is possible:
Carrying out the most detailed inventory of the company's expenses (performed by employees of the financial and economic department).
Determination of the category of each item of expenditure and analysis of the consequences of avoiding unnecessary spending, solutions should be developed at a collective meeting with the participation of the heads of all key departments. (The four main cost categories are shown in Table 1.)
Complete cessation of financing of the fourth category of expenses, if the goal is to reduce costs. In critical financial condition, it is necessary to stop or sharply limit spending on the third category. In certain cases, it is possible to limit the costs of the first and second categories, although in this case one should remember the proverb: "The miser pays twice."
Tab. 1 Classification of expenditures by priority:
|
description |
||
|
High priority |
Articles, upon termination of funding of which there is a threat of interruption of operations |
Payment for raw materials and materials for production. Remuneration for basic workers |
|
Priority |
Articles that, when funding is cut off, impair the normal conduct of business |
Payment for mobile communications for key employees. Advertising payment |
|
Allowable |
Payment for sanatorium treatment of employees. Payment for educational seminars for employees |
|
|
Unnecessary |
Items that will not have a material impact on the conduct of business when funding is discontinued |
Payment for executives' rest |
Reducing costs at the enterprise is a logical process in conditions of economic instability. How to do it correctly? Step by step about effective methods of reducing company costs - later in the article.
Effective and ineffective. Possible effective costs (refer to income generation through the sale of products for the manufacture of which were allocated) or ineffective (refer to tasks that are not related to income generation, imply losses). Among ineffective expenses, there are any types of losses - due to marriage, theft, downtime, shortage, damage, etc. Therefore, it is necessary to focus on reducing the amount of ineffective expenses. Therefore, it is necessary to establish the permissible technological costs, determining the responsibility for violation of permissible norms.
Another area of cost reduction is the analysis of the effectiveness of auxiliary work with the involvement of outsourcing companies in some areas. Engaging third-party performers on a competitive basis is a real and effective option to reduce the costs of medium and large organizations. Although it is sometimes more profitable to maintain your own divisions in comparison with attracting third-party organizations, this situation is no longer considered the rule, but the exception.
Relevant and irrelevant. Any manager needs to control whether control and planning depend on his management decisions. If they depend, then such expenses are relevant, and otherwise they will be irrelevant. In particular, expenses in the past are irrelevant, since the CEO can no longer influence them with his decisions. And opportunity costs are among the relevant ones, so management should pay special attention to them.
Constants and Variables. Possible variable, fixed or mixed costs - depends on the level of production. Variable costs are directly proportional to the level of production, without affecting constant production volumes, mixed costs contain both constant and variable parts. This division provides cost optimization - an especially important prerequisite for controlling fixed costs.
Direct and indirect. Possible direct or indirect costs depending on the method of attribution to the cost of production. Direct costs can be attributed to a specific product or service. In this category, the costs for the acquisition of raw materials, materials, wages of production workers are noted.
Indirect costs are not directly related to a specific type of product. Indirect costs include the costs of managing and maintaining departments to manage and maintain the enterprise as a whole. If an enterprise is engaged in the production of only one product, then all costs for its manufacture and sale will be direct.
A set of executive instructions that will save the company from ruin
A smart checklist and 18 instructions prepared by the editors of Commercial Director magazine will help you figure out how to urgently change the work of the sales department so that the results at the end of the year will please you, not disappoint.
The first step is to classify expenses into clearly defined categories.
The second step is to determine what costs are subject to adjustments.
The third step is planning and cutting costs.
1. Reducing labor costs
According to the provisions of the current domestic legislation, it is allowed for companies to reduce both the number of employees and wages.
2. Reducing the cost of materials and raw materials. To reduce the cost of purchasing materials and raw materials, the following enterprise steps can be taken.
- revision of the terms of contracts with existing suppliers;
- search for new suppliers;
- use of less expensive components whenever possible;
- helping suppliers to reduce their costs;
- procurement of materials together with another buyer from one supplier;
- independent production of the necessary materials;
- introduction of resource-saving technological processes that contribute to saving on the cost of raw materials;
- giving priority to the procurement process of materials and raw materials;
3. Reducing production costs. Consider questions that can be applied in assessing the effectiveness of efforts to reduce costs:
1) Rent payments:
- Is it possible for the company to revise the terms of the current lease agreement?
- is it possible to move to another room or building?
- Is it possible to sublease a part of the occupied area of the company?
- Could the company be more profitable to buy out the leased premises?
2) Utility bills:
- Is it possible in the company to have stricter control over the consumption of energy resources?
- Does the company have the ability to implement more cost-effective processes?
- is it possible to switch to new conditions for payment of utility tariffs?
3) Repair and maintenance of equipment:
- Is it possible to postpone certain work for a long or short time as part of the current equipment maintenance?
- Could it be more profitable for the company to refuse the services of contractors, taking up the repair of equipment on its own. Or will it be cheaper to hire a specialized organization if the company itself is engaged in the current maintenance?
- can the company come to an agreement with current contractors to improve the terms of the equipment maintenance agreement in its favor?
- is it possible to search for new service providers for the company?
4) Integration and disintegration
- Is it possible to reduce the company's costs through vertical integration with suppliers or customers, or through horizontal integration with other manufacturers?
- Is it possible to reduce the company's costs by expanding the scope of its business to other parts of the production cycle, with the refusal to work with subcontractors? Or will it be more profitable to narrow the production area, to part of the production cycle, or to carry out ancillary work, yielding to another manufacturer?
5) Transport:
- is it possible to limit the number of service vehicles?
- Could the option of outsourcing a trucking company to the functions of a trucking department be considered?
- wouldn't it be easier to attract a logistics company (or a professional logistician) for the purpose of consulting on reducing transport costs?
- is there any data that confirms - the compatibility of the growth of advertising spending with an increase in sales.
5. Additional measures to reduce costs. Is it possible to reduce the company's costs in the following areas:
- conducting experimental design and research work;
- maintaining a wide range of products;
- maintaining a certain quality of services provided;
- maintaining a wide range of its clients;
- mechanization of the production process;
- raising the level of qualifications of personnel;
- careful selection of components and raw materials that meet certain technical parameters;
- speed of order fulfillment;
- organization of production;
- maintaining the flexibility of the production process;
- maintaining the existing policy on maintenance of machinery and equipment;
- support for distribution channels of manufactured products.
6. Government support. Is it possible for the company to benefit from a specific government program to support entrepreneurship by doing the following:
- lobbying for the adoption of relevant federal and local legislation;
- receiving subsidies and benefits.
1. Reducing tax costs:
- conclude an agreement with the individual entrepreneur.
- to conclude contracts with a legal entity. by persons.
- to organize a holding structure operating under a simplified taxation system.
- transfer management functions to a separate legal entity. face.
2. Reducing the cost of maintaining unused property:
- to sell the materials that were formed during the dismantling process;
- not to write off, but to sell the depreciated fixed assets.
3. Innovative cost reduction:
- introduction of more economical equipment and technologies.
- to develop low-cost production.
4. Decrease in expenses related to depreciation:
- transfer the property to the repeated application of the amortization of the premium. The company has the right to write off up to 10% of the initial price of the fixed asset at a time in the expenses of the current reporting period.
- to reduce the period of use of the object by the time during which it was used by the previous owner for the purpose of calculating depreciation.
- proof of the repair nature of the work instead of modernization and reconstruction;
- recognition of the redemption value of the leased property as an expense, if the object is registered with the lessor.
5. Debt handling:
- implementation in any cases of measures to collect debts.
Revision of the work of the logistics service. The logistics of the enterprise is based on the principle of "it happened", and not according to a pre-established plan. But even when organizing this work on the basis of a plan, according to experts, a quarterly revision of the main functions in the department is necessary to determine whether any of them have lost their relevance.
Practice confirms that thanks to this revision, many points of waste of time and money for the company can be identified.
Thanks to the audit, the logistics succeed critically. In particular, the staff of one company included several specialists who translated the same type of invoices for customs and banks. Based on the results of consultations with the broker and the bank, a glossary of frequently used words was sent to the customs, with the preparation of certain templates for translation, which made it possible to part with the translators.
If you organize a logistics system in a company with a clear structure, understandable KPIs and control, these measures will allow you to get an immediate noticeable effect. Further, it is necessary to deal with already optimization of individual functions of the enterprise.
Inventory Management. It is necessary to calculate the required stock of warehouse stocks, the minimum safety stock, the volume of products that are in transit, with the development of delivery schedules and payment of invoices. This will significantly reduce associated costs.
Transportation planning. First of all, in order to reduce logistics costs, it is necessary to ensure the reliability of transportation in terms of timing and safety of the cargo. Thanks to this, the transport can be used as a warehouse on wheels, with a significant reduction in overall storage costs.
In order to reduce transportation costs, it is important not so much to demand discounts from carriers, but to properly plan for reducing costs. It is noteworthy that the most effective option for reducing transport costs is loading in 2 years. On the 2nd place in terms of efficiency - to maintain the stability of the downloads according to the schedule.
Choosing the right logistics service provider. In that matter, you need to critically approach the "old attachments", conducting a constant study of the available services and prices.
Summing up, it can be noted that a systematic approach becomes the main condition for optimizing logistics and reducing the corresponding costs. In a company in which a holistic system can be established, accustoming employees to constantly drawing up plans, making decisions based on calculations, and not traditions, there is a daily improvement of processes, and periodic audits involve only making minor adjustments, contributing to the achievement of success for the company. Experts from the School of the General Director will tell you more about accounting and cost sharing at.
Maria Isakova,
logistics expert, Moscow
Companies in most cases seek to optimize the part of the logistics that is managed by counterparties. Often, at the same time, they begin such an optimization with the transport component, negotiating with carriers and forwarders to reduce prices. But it can be clearly stated that it is impossible to achieve lower prices from carriers every time, and the effect of such a decrease is diminishing. To ensure maximum results, the beginning of the policy of reducing logistics costs should be the optimization of the logistics department.
Planning to reduce costs involves a set of activities, divided by time:
Konstantin Fedorov,
Development Director, PAKK, Moscow
When implementing cost optimization, enterprises usually use administrative leverage according to the principle "if you do not cut costs, we will fire". Because of this, a situation arises when ordinary employees and managers of the company begin to sabotage changes either explicitly or openly. Moreover, many consider optimization to be a sign of weakness in their leadership.
Advice. It should be agreed in advance how the company will thank all participants in the cost reduction program after its implementation. At the same time, this gratitude does not have to be financial. In particular, you can think about career advancement or other options.
Walter Borie Almo,
General Director of the Ufa meat-packing plant
Our planning and finance department processes all available information to plan and control costs - from ingredient prices to equipment performance and energy consumption. Continuous analysis is the basis for further cost savings. We divide the costs in our work into 2 categories - for some, significant investments are required, in the case of others, simple procedures will be enough. Don't give up on simple solutions that can help you achieve tangible results at the lowest cost.
To analyze the results, we use the KPI system of key performance indicators. The data are compared with the results of five companies in our holding. It is not always possible to achieve results thanks to this information, because we are leading in many indicators. Therefore, the collection is carried out on our competitors.
We also involve employees in our work to reduce costs. For any employee, thanks to whose idea it was possible to provide a tangible economic effect, a bonus of 3 thousand rubles is allocated.
Maria Isakova, logistics expert, Moscow. She started her career as a logistician at Bayer. In 2001-2008, he was the head of the logistics department, since 2009, the head of the logistics and order management department at Lanxess.
Walter Borie Almo, General Director of the Ufa meat-packing plant. OJSC "Ufa meat-packing plant" is one of the leading enterprises of the meat-processing industry in the Republic of Bashkortostan. It produces more than 150 types of food and technical products, as well as raw materials for the leather and medical industries.
Zoya Strelkova, leading financial analyst, head of the company economics direction of the Training Institute - ARB Pro group of companies, Moscow. He specializes in researching the economic state of companies, developing economic business models, strategic planning and other issues. She has participated in the implementation of more than 20 strategic planning projects for enterprises in various industries. Conducts seminars “Strategic everyday life. PIL-approach ”and“ Finance for managers. ”“ Training Institute - ARB Pro ”. Field of activity: business training, HR consulting, strategic management, business information support. Form of organization: group of companies. Territory: head office - in St. Petersburg; representative offices - in Moscow, Nizhny Novgorod, Chelyabinsk. Staff: 70. Main clients: Moscow Financial and Industrial Academy, Sberbank of Russia, Gazprom, Irkutskenergo, Svyaznoy, Ecookna, Coca-Cola, Danone, Nestle2.
Konstantin Fedorov, Development Director of the PAKK company, Moscow. PAKK CJSC. Business profile: consulting services, professional business development assistance. Number of personnel: 64. Average annual turnover: about 110 million rubles. Completed projects: more than 1000.
E. Perevedentseva,
Bachelor of Economics
RSU named after S.A. Yesenin,
Scientific adviser - Cherkashina L.V.
Keywords: costs, concept of costs, cost management, enterprise, optimization, cost reduction measures, cost management, cost analysis.
Cost is the cost of resources used to generate a profit or to achieve other goals of the organization. Costs arise at the moment the organization purchases goods (long-term assets, raw materials, materials, semi-finished products, goods for resale, etc.) and services of third-party organizations (lighting, heating, sewerage, water supply, transport services, etc.), as well as when settlements with personnel for wages, social and other obligations. The emergence of costs is accompanied by the payment of cash, other property, a decrease in claims (receivables), an increase in debt obligations.
Costs are in constant flux, change. In particular, prices for purchased raw materials and materials, electricity tariffs, various communication services, transportation, etc. are constantly changing. individual costs differ in varying degrees of influence on the economic results of the enterprise as a whole, on the level of certain types of subsequent costs.
Any enterprise has its own costs, there are a large number of them, someone has more of them, someone has less. And each enterprise, to the best of its ability, is trying to find methods and ways to reduce them. They develop specific policies to reduce their costs.
Any manager understands that costs are a necessary part of the business. Therefore, it should be understood how productive the costs are, whether each ruble invested in the main and auxiliary activities is working to create profit. This will help eliminate all non-production costs.
Cost management involves conducting a thorough cost analysis. Cost analysis also involves comparing actual costs with planned ones, identifying deviations and taking measures to eliminate them. To control costs, the enterprise needs to create a department that will control and stimulate their reduction.
The goal of any optimization is to improve the efficiency of the enterprise, not just to reduce costs. Cost reduction is inseparable from cost efficiency. To develop measures to reduce costs, you need to understand how costs are generated in each area, how business processes are designed and what should be done to reduce costs. For this, certain action plans are drawn up to reduce costs. These plans usually include cost items that need to be reduced. When drawing up a plan to reduce costs, it is necessary to determine the person responsible for its implementation.
Optimizing cost management is the main element of the cost management system. Without cost optimization, the company will not be able to survive in a rapidly changing environment. The effectiveness of cost reduction depends on how income and expenses are recorded.
In practice, there are three ways to optimize costs:
Planned cost reduction, which implies a gradual cost reduction over several years;2. Rapid reduction, which requires work to reduce costs over several weeks or months;
3. Express reduction, which can be carried out within a few days.
Let's take a closer look at each of these optimization paths:
1. This cost reduction is associated with the improvement of three areas of activity: investment, procurement, production processes. All three of these processes form the largest share of the enterprise's costs. And therefore, managers try to reduce them gradually, so that they have a lesser effect on the final activity of the enterprise, i.e. profit.
Investment management. Investments that are invested in the purchase of new equipment and in the introduction of new modern technologies are necessary for the enterprise to solve and improve the tasks for the production of products. Due to the fact that a large amount of money is spent on such investment projects, investment projects must undergo a serious selection. This requires full justification of the feasibility of such an investment. The manager must clearly and accurately understand whether his costs will pay off in the future, and what will be the profit.
Procurement management. Purchases are the main cost of the enterprise. It involves the search for more profitable suppliers. It depends on the supplier how effectively the needs for raw materials, materials, etc. will be satisfied.
Manufacturing process management. In some enterprises, the technology of "lean manufacturing" is used to effectively reduce costs. All costs are assessed from the point of view of the client, he would pay for low-quality products. With this enterprise, you have to either get rid of those processes that the buyer did not approve, or reduce the cost of them.
2. Rapid cost reduction implies a reduction in fixed and variable costs of the enterprise. In this way of reducing costs, there is a reduction in the cost of raw materials and materials.
The most effective solution to reduce costs is to renegotiate supplier contracts. It is necessary to look for such companies that can offer lower prices for raw materials and materials, as well as provide deferred payments.There is also a decrease in the number of overhead costs. This includes costs for electricity, transportation, heating, etc. Energy costs can be reduced by controlling energy consumption; the lighting of the room should be limited at night, if this does not interfere with the production process; you can also switch to economical lighting and equipment. As for the cost of transport, the number of company vehicles should be reduced, and the fuel consumption for these vehicles should be monitored more closely. Heating costs can be reduced by installing steam generators.
Another way is to reduce the wage bill. A more acceptable way to reduce costs is to reduce wages, but in order to prevent the employees of the enterprise from getting into a state of unwillingness to work, it is necessary to provide them with social benefits: free meals, extended health insurance, etc.
3. With such a reduction in costs, you need to stop paying costs for some items as soon as possible. Costs should be determined by significance. They can be high-priority, high-priority, acceptable, and unnecessary. Of these costs, it is necessary to discard unnecessary costs, since they do not bring any profit to the enterprise (payment for rest for the head of the enterprise). Further, financing of admissible costs should be reduced (payment for sanatorium treatment of employees). High-priority and high-priority costs should not be cut because they threaten to shut down operations and damage the normal running of the business.
Also in practice, a possible way to reduce costs is to increase their efficiency. There are three main models of efficiency:
A) "net" cost reduction - cost reduction due to getting rid of unproductive costs. The main savings come from fixed costs;
B) "intensification" of costs - there is even a slight increase in costs, but at the same time the proceeds increase and increase more significantly. As a rule, this happens when introducing new equipment, technologies that increase the productivity of equipment, and, consequently, revenue;
C) "fixing" costs - when with an increase in revenue, costs do not increase. As a rule, this is either an increase in the price of products, or an equivalent increase in production costs and a decrease in unproductive costs. These models have both pros and cons.
In order to avoid unnecessary costs, there are three main ways of operating an enterprise. The first way is planning. It is necessary to plan in advance the ways of spending the articles of the enterprise. It is necessary to have the planned volumes of income and expenses with a breakdown by months, quarters, years. Rational cost planning leads the company to the intended profit goals.
The second way is control. The manager should have extensive information about his enterprise. The ability to control costs appears from the moment they begin to be taken into account. A department for cost reduction is formed at the enterprise. He studies the factors influencing the formation of costs; find out the possible reasons for the interruption in the production process. Then, all these costs are analyzed and employees develop a program to reduce the identified costs, and the manager reviews and approves them.
The third way is discipline. The enterprises must have strict financial discipline, it is confirmed by the order of the head.
The direction of cost reduction programs is very diverse, in particular, these are:
· Introduction of new, more economical technologies;
· Application of more modern organizational concepts;
· Outsourcing - refusal from own production of some products or services and transition to purchasing from third-party organizations;
· In contrast to outsourcing, the transition from procurement of a number of products and services on the side to their production in-house;
· Invention and innovation
The successful implementation of the cost reduction program and the creation of a mechanism for regular cost optimization will allow the company to increase business efficiency or use low prices for products as one of the key competitive advantages.
In reality, enterprises have many different types of activities, costs, they interact with a large number of suppliers, partners, buyers, staff with certain qualifications work in it, so it is advisable not to follow exactly one specific cost reduction model, but to apply them to the situation that has developed at the enterprise. And each enterprise, through certain losses and mistakes, determines for itself the most effective methods of optimizing the costs of the enterprise.
LITERATURE
1. Vasina A. “Cost reduction projects: description of alternatives and calculation of economic effect” [electronic resource] // “Cost reduction projects” - Access mode: http://www.alt-invest.ru/library/invanalysis/costreduction. htm., free - Title. from the screen;
2. Gagarskiy V. "Reducing company costs" [electronic resource] // "Reducing company costs" - Access mode: http://gagarskiy.narod.ru, free - Title. from the screen;
3. File archive for students [electronic resource] // "File archive" - Access mode: www.studfiles.ru, free - Title. from the screen.
In this article, you will learn about several alternative methods of reducing enterprise costs and get acquainted with examples from Western practice (see How to reduce personnel costs in foreign companies and How to stop losing money without much effort: advice from Russian colleagues). We bring to your attention 16 original ways to deal with unnecessary spending.
How to reduce personnel costs in foreign companies
Real estate agency Luxury Retreats practices staff redeployment. Thus, eight employees from the development department were trained and began to work in the sales department (in positions that bring the company a profit).
When demand falls, Rhino Foods (an ice cream company) sends employees to work at the make-up company Autumn Harp.
Recruitment agency Accolo asked employees to take five days of unpaid leave, promising not to cut wages.
Paint manufacturer Sherwin-Williams has introduced a floating vacation schedule for its employees at its own expense - voluntary suspension from work for six weeks.
Bob Phifer, head of the consulting firm Fifer Associates, has resorted to these methods.
How to Stop Losing Money Without Much Effort: Tips from Russian Colleagues
Introduce e-procurement. The tender announced on the Internet attracts a large number of suppliers who are ready to make concessions to win. If you conduct an auction with a short list of suppliers in real time, the price drops on average by 10-15%.
Set a minimum order size. Due to underutilization of vehicles for retail deliveries, the profitability may be 8–12% lower compared to deliveries to large customers. You can either enter a minimum order amount, or charge for shipping items that have a total cost less than your specified rate.
Prohibit the use of office phones for personal purposes. A printing company from Nizhny Novgorod receives a printout of calls from work phones from a cellular operator and analyzes those whose cost exceeds several hundred rubles. The company warned workers that spending on face-to-face conversations would be withheld from their salaries. As a result, the monthly payment for telephone communications decreased from 200 thousand to 40 thousand rubles.
Practical experience: Kirill Gulyaev - General Director of the First Printing Plant, Krasnogorsk (Moscow region)
Keep warm, load warehouses, commercialize canteen
Heating by the heat generated by the equipment. This method is called heat recovery: we use the waste hot air to heat production areas. The purified air coming from the printing equipment is not released into the atmosphere, as is usually done, but enters a special heat exchanger. There, hot gases heat the water that goes to the heating system of the enterprise. This reduces the load on the boilers and reduces heating costs. Equipping the machines with heat exchangers increased their cost by a fraction of a percent of the original price, and the use of this technology allowed us to save, according to the most conservative estimates, about 8 million rubles. in year.
Reducing logistics costs by leasing warehouse premises to your suppliers. We have our own warehouse complex with an area of 7,500 sq. m. According to the production technology, we must store a two-week supply of paint in the warehouse. At the same time, most of the consumables are brought from abroad. To reduce delivery costs, we offered one of the major suppliers to lease our warehouse space (about 6% of the total warehouse area). The supplier agreed, and now the logistics for us is limited to the delivery of ink from our own warehouse to the printing shop. Raw materials are not included in our warehouse stocks and are supplied in exactly the required volume as required. In addition, we received additional rental income, and our partner acquired conveniently located warehouses and a loyal customer under one roof.
Services of our own canteen for third-party companies. There is a canteen at our enterprise, employees, due to subsidies from the company, can eat tasty and high-quality meals at minimal prices. At a certain point, the cost of dining became burdensome for us, as food becomes more expensive, and the increase in food prices is an unpopular measure. As a result, we commercialized the canteen and entered into contracts with nearby organizations. Now we deliver meals to neighboring offices on the machines of the plant, and some employees of these enterprises come to us themselves. Due to the fact that purchases of food products were increased, we were able to reduce costs. This made it possible to bring the corporate canteen to break even without increasing the burden on the wallets of its own employees.
Practical experience: Sergey Shilov - Managing partner and owner of AT Consulting, Moscow
Transferred the IT department to self-sufficiency
One of the options for reducing costs is to make those divisions that usually do not bring direct profit to self-sufficiency. For example, during the economic crisis, our IT department began to serve some of our clients (in particular, those who use the same mail system as us). Employees began to support this system for a separate fee, partially compensating for their content. As a result, the company's expenses on this department were reduced by 40% in four months.
Practical experience: Evgeny Firsov - Deputy General Director for Operations of Agro-Industrial Complex "Stoilenskaya Niva", Stary Oskol (Belgorod Region)
Purchases of raw materials at minimum market prices
One and a half dozen bakery enterprises of the group monthly purchase raw materials for 190-200 million rubles, its total share in the cost of production is about 40%. The range of price fluctuations in different groups of raw materials is from 3 to 30%. It turns out that a change in the price of some of its types by only 1 ruble can cost us 5 million rubles. per month throughout the holding.
Purchases are carried out directly at the enterprises of the holding, which creates
fertile ground for corruption. In order not to lead employees into temptation, we have introduced a special information system "Stoilenskaya Niva - Raw Materials and Materials" (unofficially we call it "Raisins"). Now our 14 purchasing centers operate in an environment of internal competition and absolute transparency, when everyone can see everyone.
The principle of the system is as follows: an employee of the procurement department who is going to buy raw materials must print a special sheet, which is automatically generated by the Raisin system. It describes in detail when this raw material was purchased both by the enterprise itself and by other companies within the group. The document indicates the best prices at which raw materials were purchased over the last 10, 30, 60 and 90 days. As a result, the procurement department employees receive the necessary information, and the CFO, who does not even understand the nuances of the sugar market, will not miss a specific deal, because he will see: for example, at a neighboring enterprise three days ago, sugar was bought cheaper. If the proposed transaction is completed, it immediately goes to the centralized information system, where a database is formed containing information about all transactions.
For example, a large enterprise purchasing large enough volumes of raw materials turned out to be average in prices, and a small enterprise, where prices seemed to be higher due to small volumes, achieved the lowest prices for raw materials among all enterprises of the group. Naturally, we parted with buyers at a large enterprise and transferred specialists there from a small one. The situation changed instantly, and today it is our leader in procurement efficiency. There have been cases when line managers of procurement departments at enterprises tried to probe the system. Some of them declared in an ultimatum: “There are no such prices for cottage cheese, if you don’t believe it, come and try to buy it yourself”. But the system dryly stated the opposite, and for some reason everything worked out for the specialist who was taken to the place of the dismissed one.
The system administrators are two people at the company's central office: the head of the price analysis service and his assistant. The tasks of this group are technical administration, transferring information about the best prices to managers of all enterprises, and to managers - proposals to terminate labor relations with unscrupulous buyers. Also, these specialists control the simultaneous purchases for several factories at once, so that, by interacting, we can get additional discounts.
Everything you need to work should be at hand - this will increase labor productivity
We have been introducing process management technology at our company for the third year already. To begin with, we measured and analyzed the consumption of working time for each production operation (for example, preparing raw materials, preparing a dish). In particular, it turned out that quite a lot of time is spent finding the right ingredient or tool. By optimizing the workspace, we were able to reduce waste and increase productivity by 16%. This was achieved thanks to the “bent arm” rule. The essence of this rule is that you can reach everything you need for work without fully extending your arms. For example, the cook's workplace is now organized so that he does not have to run for inventory from one end of the shop to the other what distance should be placed inventory and equipment). As a result of the measures taken, we were able to reduce the number of personnel at each facility, transferring people to new production facilities.
Every business spends finances to manufacture goods or provide services. Profit is considered to be the difference between the amounts spent on production and gross income, which is also called turnover. In some cases, it is possible to increase cash flow by understanding which items of expenditure can be reduced, but this must be done very carefully so as not to harm the company's reputation and not reduce the quality of the goods produced.
Any enterprise has its own specific items of expenditure that help it to function fully. All of them can be intelligently optimized, which will certainly bring higher profits and lower costs. You have to invest in the following needs:
Before reducing the costs of the enterprise, it is worth carefully reviewing each of their articles and concluding that it is advisable to optimize.
Any enterprise has hired employees who perform a specified amount of work for a certain remuneration. The legislation of Russia states that the employer can independently regulate the level of wages, decrease or increase it.
However, keep in mind that there is a maximum allowable rate of reduction in wages, and an employee cannot receive less of it.
To optimize the item of expenditure on salaries, you can take the following measures:
All these points will be effective only if their application does not negatively affect the ultimate goal of each production - profit. For example, firing a highly paid wood processing specialist and hiring a less qualified but cheaper employee in his place can lead to a decrease in the quality of your products, and this entails the loss of potential buyers. It is for this reason that any manipulations with wages must be thought out to the smallest detail.
What we manufacture our product from is also quite expensive, especially considering the recent devaluation of the ruble and the massive use of imported materials. However, this cost item can also be reduced by doing the following:
It is necessary to translate these actions into reality very competently and intelligently so as not to reduce the quality of the final product. For example, for the manufacture of chocolates, it will be more expedient to purchase high-quality cocoa beans, but switch to more affordable packaging, so you can keep the same product composition, but its cost will be lower than before.
Production costs for transport are sometimes fabulous, because raw materials must be transported from different states or even continents, and the delivery of finished goods must be carried out throughout the country. In this case, it will be beneficial to use the services of logisticians or create such a department in your company. This will maximize the productivity of the transport, since it will travel with loads in both directions, respectively, for the driver's wages and fuel. You can also consider the option of working with suppliers of materials that are located closer to your company.
To sell a product at a bargain price, you need to correctly present it to the end customer. This is why advertising campaigns are organized, the costs of which are often very large. To reduce this cost item, you need to revise the following factors:
If you do not get these results when you reduce the cost of pr, then the savings will be ineffective. It is for this reason that each point of cost reduction needs to be carefully reviewed and analyzed.
Each production facility makes certain concessions to its large customers and makes special offers for them, implements loyalty programs, and provides additional services. All this entails significant costs that reduce the level of profit. You can refuse the most expensive services, for example, SMS notifications of customers about promotions, constant mailing of letters to e-mail, and more. At this point, you also need to weigh the pros and cons of saving, because the refusal of some services can negatively affect the company's image and reduce the number of its regular customers.
Any production has a certain area, which is necessary for the comfortable organization of all work processes. It can be a small hangar or a huge area of several hundred hectares with premises and workshops for various purposes. Regardless of the size of the premises, you need to pay rent for them or spend money on their maintenance. You can reduce this expense item by using the following tips:
If you are the owner of all the premises and buildings of the production, you can reconsider your expenses for maintaining them in a safe condition for work. Regular maintenance and major repairs can be done using cheaper materials, premises can be cleaned without cleaning companies, but with the help of hired employees.
Enterprises use natural resources for their activities, the payment for which is now quite expensive, given the special tariffs for industries. The following measures can help reduce this cost item:
To ensure that production does not stand idle, you must always keep the equipment in good condition. High-tech machines are most often serviced by special companies, whose services are not cheap. It is possible to reduce waste on this, if you reconsider the following factors:
All these items can significantly reduce the cost of repair and maintenance of machines.
However, remember that in some cases it will be more profitable to trust a team of professionals than to create your own service department, since the work of good specialists is paid dearly, especially when it comes to the software of the units.
This is a very broad article that will have specific points for each enterprise. For example, you can take a large plant that spends money on such additional measures:
In some cases, these additional costs can be completely dispensed with if they do not significantly affect the level of product sales. However, when the reputation of the company and the number of its regular customers depend on these factors, it is worth carefully considering reducing costs, because this can lead to a difficult economic situation.
Any company can reduce its costs without compromising reputation, quality of final products and working conditions for employees. However, in order to correctly assess all reserves, it is necessary to conduct a serious study that will show which cost items it would be advisable to cut, and which should be left at the same level for the full development of production. Only a carefully thought out cost-saving plan can produce the desired results.
