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Cost reduction

Method

Now, from now on, I will describe the "cost reduction measures" of the main subject for each expense item, but the following measures are common to most of the expense items.

From the reader's point of view, it seems to be very tedious, but I am confident that these are such effective measures, and that even if they are thoroughly implemented, sufficient results will be obtained.

* For confirmation, each large expense item is also listed as a "common measure".

1. Reset application items

Focusing on the "application content" of the component, it resets the items necessary to judge whether or not the application content is acceptable, and makes the description a rule.

If you apply so far, what was thought to be approved will be stricter, and the person in charge who received the application will examine the content that uses "cost" and change it to a process of giving instructions to correct or reject if it is inappropriate. is.

Specifically, whether the application is based on plans such as budgets and goals, whether the purpose of using costs is appropriate, whether it complies with regulations and rules, and whether the amount is expensive. , Whether the quantity is set to the minimum necessary, etc. are examined "in advance" and the items necessary to judge the validity are reset.

2. Pre-application rules

Focusing on the "application time" of the component, it judges whether or not the cost can be used before using the cost, and prevents unnecessary use of the cost.

If the application is "in advance", you can check the "application content" before using the cost, but if it is "after the fact", the cost has already been used and there is no point in checking it, so apply in advance. All applications other than are rejected. It is necessary to make this a rule and give the person in charge the power of coercion to make it thorough.

3. Line up for management

No matter how good a measure is made to promote "cost reduction measures", if there is no power to promote it, it will be a rice cake that is drawn in the picture. Cost management is wasteful due to the fact that even if there are rules, it is not possible to comply with the conventional method, and that each part of the company operates and manages at its own discretion. I will. In order to solve this, it is necessary to strengthen the authority of each person in charge at the head office, and to line up the managers in each part of the company at the head office to centralize instructions and management.

In order to "line up", it is necessary to clarify the division of roles between the head office and the site and avoid duplication of work. As an "instruction organization", the head office prepares a budget for company-wide costs, formulates strategies, formulates and instructs execution of "cost reduction measures" in an emergency, and accepts, examines, and approves "applications" when using costs. The site will execute the budget given as an "execution organization" under the direction of the head office, promote the efficiency of operations, execute "cost reduction measures" in an emergency, and make an "application" when using costs.

However, with this system, there is a possibility that there will be differences in management among the departments in charge of the head office, so in order to prevent this, it is necessary to set up a superior organization or officer in charge to supervise them.

4. Establishment of company-wide cost management organization

"Establishment of a company-wide cost management organization" is an evolution of the "line-up of management staff" in the previous section. Although it has been lined up at the head office, there is a risk of a difference if there is no function to unite each person in charge at the head office, so from the true meaning of company-wide centralized management, a specialized organization for company-wide cost management (name is "business" It doesn't matter whether it is the "Headquarters" or the "General Affairs Headquarters").

This new organization will be the main force of company-wide "cost management", from budgeting and strategy formulation of company-wide costs, planning and execution instructions of "cost reduction measures" in an emergency, and "application" when using costs. Accepts, examines, and approves, and plays the role of a company-wide cost control tower.

5. Implementation of competitive quotation

Focusing on the "order price", we always use the "principle of competition" without fixing the "ordering company" to obtain an appropriate price, which is a measure when ordering goods and operations from outside. ..

"Competitive quotation" is a measure applied when ordering goods and operations from outside, and the "order price" is always changed by the implementation of "competitive quotation" by multiple vendors.

In order to make a "competitive quotation", it is necessary to determine the "specifications" of goods and operations in advance, but the "specifications" of the items currently ordered can be found by examining the purchase order, contract, etc. You can use to make a "competitive quote" right away.

Of course, if you make a "competitive quotation", the orderer can get the lowest price, while the winning bidder can receive orders for other companies by "competitive quotation", so what has been done so far? You can get double the order amount. Furthermore, by repeating the "competitive quotation" instead of only once, the order price linked to the "market price" can always be obtained, and the selection of the ordering company progresses, and the business relationship with only the excellent surviving companies can be established. It will be formed and lead to the construction of a strong business model.

It is the responsibility of the person in charge to constantly check the market, verify that the order unit price is appropriate, and place the optimum order, and it can be said that "competitive quotation" is indispensable as a method for that. ..

6. Consolidation of ordering operations

"Competitive quotation" is a measure that can be taken as soon as the person in charge of ordering feels like it, but from the perspective of the person in charge, it takes time and effort from specification creation and vendor briefing to estimation evaluation and vendor determination, and it is new. It is considered to be a troublesome job because it requires guidance every time you change to a contractor.

However, if the ordering company is fixed without making a "competitive quotation", the person in charge will not have to take time and trouble, and since the company is accustomed to the work, it will be possible to "throw the whole thing" and the work will be very easy. However, it is a matter of convenience for the person in charge, and the order is expensive for the company, which is a great inconvenience.

In order to ensure the implementation of "competitive quotations" and to realize "unification of order prices", it is necessary to have an organization that concentrates the ordering operations, which are carried out at the discretion of each part of the company, at the head office. I think that the position as an organization should be set up in each department in charge of the head office or in each person in charge within the above-mentioned "company-wide cost management organization".

Cost reduction methods
Now, I will discuss the main topic of "cost reduction measures" for each expense item, but the following six measures are common to most expense items.
This may seem very repetitive to the reader, but these are very effective measures, and I am confident that sufficient results will be obtained by simply implementing them thoroughly.

1. Thorough pre-screening
This focuses on the "screening" of component applications, and will thoroughly screen the application content to determine whether it is acceptable or not.
Until now, it was thought that an application would be approved as soon as it was submitted, but now this will be made more strict, and the person accepting the application will review the content ofthe "cost" and, if it is in appropriate, will instruct the application to be revised or rejected.
Specifically, the application content will be reviewed to determine its appropriateness based on plans such as budgets and goals, whether the purpose of using the cost is appropriate, whether it complies with regulations and rules, whether the amount is too high, whether the quantity is set to the minimum necessary, etc.

2. Making "advance application" a rule
It focuses on the "application timing" of components and determines whether or not a cost  can be used before it is spent, preventing wasteful spending of costs.
If the application is "advance," the "application content" can be checked before the cost is spent,
but if it is "after the fact," the cost has already been used and there is no point in checking, so all applications that are not advance applications will be rejected. It is necessary to make this a rule and give the person in charge the power to enforce it thoroughly.

3. Line management of management personnel
No matter how good a "cost reduction measure" is, it will be nothing but pie in the sky if there is no power to push it forward. In the past, cost management had rules but they were not followed, and each part of the company operated and managed it at its own discretion, which resulted in cost waste. In order to solve this, it is necessary to strengthen the authority of each person in charge at the headquarters and to centralize instructions and management by lining up the management people in each part of the company to the headquarters.
When "line management" is implemented, the division of roles between the headquarters and the field must be clarified to avoid duplication of work.
As the "directing organization," the headquarters will be responsible for budgeting and formulating  strategies for the entire company's costs, planningand issuing instructions for the implementation of "cost reduction measures" in emergencies, and accepting, reviewing, and approving "applications"when spending costs. As the "executing organization" following instructions from the headquarters, the field will execute the budget given to them, efficiently promote operations, implement "costreduction measures" in emergencies, and make "applications" when spending costs.
However, this system may lead to differences in management among the various departments at the headquarters, so to prevent this, it is necessary to establish a higher-level organization or executive officer to oversee them.

4. Establishing a company-wide cost management organization
The "establishment of a company-wide cost management organization" is an evolution of the previous section, "putting management personnel in a line."
If the headquarters is put in a line, but there is no function to unite the various personnel in the headquarters, there is a risk of disparity.
To truly achieve unified management, it is necessary to establish a specialized organization for company-wide cost management (the name can be "Business Headquarters"or "General Affairs  Headquarters," as appropriate).
This new organization will be the central entity incharge of "cost management" for the entire company, and will be responsible for budgeting and formulating strategies for the entire company's costs, planning and issuing instructions for the
implementation of "cost reduction measures" in emergencies, and accepting, reviewing, andapproving "applications" for the use of costs, acting as a cost control tower for the entire company.

5. Implementing "Competitive Quotations"
This is a measure to obtain a fair price by focusing on the "order price" and always applying the "principle of competition" without fixing the "orderingcompany", and
is used when ordering goods or work from outside.
"Competitive Quotations" is a measure to applywhen ordering goods or work from outside, and it makes the "order price" fluctuate by always implementing "competitive quotations" among multiple companies.
To implement "competitive quotations", it is necessary to decide the "specifications" of the goods or work in advance, but the "specifications"of the currently ordered items can be found by checking purchase orders and contracts, so you canimplement "competitive quotations" right away.
By implementing "competitive quotations", the purchaser can naturally obtain the lowest price,while the successful bidder can receive orders for other companies through "competitive quotations",and can obtain orders many times larger than before.
Further more, by repeatedly conducting competitive bids rather than just once, you can obtain an order price that is always linked to the market price, and you can select and discard ordering companies,forming business relationships with only the best companies that survive, which leads to the creation of a strong business model. It is the responsibility of the person in charge to constantly check themarket, verify whether the order price is appropriate, and place the optimal order, and competitive bids are an essential method for doing so.

6. Consolidation of ordering operations
"Competitive bids" is a measure that can be implemented immediately if the person in charge of ordering is willing to do it, but from the person in charge's perspective, it takes time from creating specifications and holding a briefing session with the vendors to evaluating quotations and deciding on the vendor, and it is considered a hassle because guidance is required every time a new vendor is changed.
However, if the person in charge does not conduct "competitive bids" and the ordering vendor is fixed, the person in charge will not have to go through the hassle and hassle, and the vendor will be familiar with the work, so the work will be very easy because the person in charge can "leave it all to them", but this is for the convenience of the person in charge, and the order will be expensive, which is very in
convenient for the company.
n order to ensure the implementation of "competitive bids" and realize "unification of order prices", it is necessary to have an organization that consolidates the ordering work that is currently being done at the discretion of various parts of the company at the headquarters and performs it professionally. I think that the position of the organization should be established within each department in the headquarters or within each person in the "company-wide cost management organization" mentioned above.

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