5 tips to reduce your company’s costs in an efficient manner

 Why is cost reduction important in a business?

• The growth of an organization depends not only on how much it generates with its products or services, but also how much it spends.
• A company can sell a lot and please its customers, but if its costs exceed (or are too close) to the amounts collected, it will not grow.
• So when it comes to reducing costs, that seems to be one of the main considerations of every business. But it is not enough to just start making cuts without adequate planning.

Let’s see how can we reduce the cost.

1. Installation of solar energy panel:

Ø Overall plant electricity bill can be reduced by installing solar energy panel and it will be huge cost savings. Switching from mercury-vapour to T5 fluorescent lights.

Ø Renewable energy sources can improve a company’s environmental profile and its bottom line.

Ø One time investment and lifelong benefit.

Ø REC (Renewable Energy certificate) benefit per MW Solar. Income tax benefit in going for solar panel.

Ø Assured return on Investment in Solar.

Advantages;

Ø Changing the lighting in the warehouse and manufacturing areas, by switching from mercury-vapour to T5 fluorescent lights, the company reduces its energy consumption by one-third.

Ø Solar Power Plants do not have any moving parts like motors, bearings, pistons, shafts etc. hence the maintenance costs are very negligible.

Ø Only maintenance is cleaning of the panels and its online or mobile monitoring to ensure that generation is as expected. Low maintenance cost.

2. To avoid delaying for next process and decision making:

(EX: For all process related issues whatever clearance & approval, documents does not require department head signature. It should be permitted to clear by down line person itself as soon as possible. Finally it should be reported to the head properly)

Advantages;

Ø Task will be completed at the expected time.

Ø Managers can make decisions to govern how a company reaches its goals. Many of these goals have financial aspects, such as revenue and profit targets. The level of costs included in such decisions which has a major impact on the finances of the company. Reliable reporting of actual costs, accurate estimation of projected costs and the appropriate integration of such costs in managerial decisions is a key component of business operations that meet their targets and further the goals of the company.

Ø It will reduce man-power and time wastage.

Ø More productivity at right time.

3. Avoid non utilizing people’s talents, skills and knowledge:

Ø Proper job responsibility allocation should be allotted more responsibility and also given opportunity to create new implementations. Avoid over load to a single person.

Ø Find out man-power wastage and utilize proper way in each department. Once-a-year performance reviews and introduce award for best employee.

Ø To get an idea and suggestions from shop floor persons to improve our productivity with quality and less cost wise.

Ø To conduct employee encouragement activity (appreciation).

Ø When people leave the organization, assess their demographic profile to enable you to track better trends. For example, employees who keep the same job title for more than three years have the highest rate of voluntary turn-over. However, if the trends are skewing in a more unfavourable way, you’ll need to evaluate the situation and find the root of the problem.

Ø If you find that your highest performers are leaving the company at a faster rate than your average or poor performers, then you should locate the red flags and take steps to improve unfavourable trends. You may discover that the feedback you provide isn’t enough to let them know that they are appreciated.

Advantages;

Ø Proper knowledge utilization will give more productivity with less time without error.

Ø Individuals would feel more motivated. They would learn and progress in their job to a greater degree. They would feel greater engagement and satisfaction in their work.

Ø People will realize their responsibility and they will be proud to work in organization. Employee work recognition and appreciation will improve productivity and efficacy.

Ø They will upgrade their own knowledge and they will approach in a positive way. Positive energy gives productivity improvement.

4. To avoid unnecessary Over Time:

Ø To avoid Over time, plan shift for all supportive functions. Like group 1 should report at 8 am - 4 pm & group 2 should report at 11 am-7 pm. You can achieve continuity of work from 8 am-7pm. Avoid double shifts, making for 16-hour day are a bad practice. Except in emergencies, overtime on eight-hour schedules should be limited to an additional four hours.

Ø All training programs to be conducted from 5-7 pm. Not during working hours.

Advantages:

Ø Cost saving through over time.

Ø Will get continuity of work and man-power error will be reduced due to avoid of double shift.

Ø Reduce wastage of time and man-power. Effective training will give more productivity, quality and less manual error with expected delivery time.

5. Use data bank system instead of paper usage:

Ø RM should be in a centralized documents data bank in system. One click to view all related documents. Because soft copy maintenance will be better than the hard copy maintenance.

Ø To introduce centralized product license there should be a data bank with all details.

Ø APR related documents should be computerized using technical support from IT professionals.

Advantages:

No use of referring physical document and saving of time as well as paper cost. Less space occupies. Hard copy issuance work will be reduced.

At one click it will show all details.

At one click we can review complete product performance.

Conclusion:

Each of these 5 ways to reduce business costs focuses on making an alternate decision that can save you money. If you can adopt a "business cost-friendly" mindset, helping you reduce your business costs every day. Many of these smart decisions will become second nature and eventually work their way into all of your business decisions.