| Why cut costs now? | | | | percentage of time each employee is doing productive |
| Efforts are multiplying to cut costs wherever possible | | | | work, you can save a lot of money. Encourage |
| in order to achieve or preserve high profits. The | | | | employees to use their down time either for gaining |
| resulting benefits for all of a company's employees | | | | additional training or for seeking ways to improve the |
| should be obvious. | | | | efficiency of their processes. |
| It should be obvious, but sometimes it is not. One of the | | | | Seek suggestions from employees - Ask your people, |
| lessons of the Dot-Com debacle is that many of the | | | | "How can we accomplish the same thing for less |
| companies went belly up due to profligate spending by | | | | money?" You will be surprised at the creativity they |
| the executives. | | | | have. At my company, for example, in response to an |
| Of course, you would like to achieve high profits by | | | | employee suggestion, water coolers placed at |
| having a record-breaking sales year, but that may not | | | | strategic locations throughout the plant have replaced |
| be likely to happen this year given all of the | | | | providing individual bottles of water to employees. This |
| uncertainties of the economy and the political situation. | | | | has already resulted in a significant savings per week. |
| Levels of sales success are certainly unpredictable. | | | | Better use of copiers - Employees can save |
| The level of sales, however, is only one ingredient in | | | | considerable copying expense by using color copiers |
| the recipe for success. You must also be interested in | | | | only for final drafts and increase the incidence of |
| keeping your costs as low as you can, because the | | | | two-sided copying. |
| real number to watch is your profit, the difference | | | | How can we cut costs even more?Everyone in your |
| between your income and your spending. Remember | | | | workplace can get involved in this process by finding |
| that this year can be more successful than last year | | | | opportunities to... |
| even with lower sales if you can reduce your spending | | | | - Improve your processes so that you can accomplish |
| enough. | | | | the same excellent results in less time, with less effort, |
| To increase profits, you can either increase your | | | | and for less expense; |
| income, reduce your spending, or both. As your | | | | - Eliminate waste; |
| salespeople are aggressively searching for additional | | | | - Employ teamwork; and |
| customers as well as seeking opportunities for more | | | | - Find ways to add value to what you are doing |
| sales to existing customers, the rest of the employees | | | | without adding cost. |
| can work on the other end: reducing costs. If sales are | | | | Ideas neededYou need each employee and every |
| lackluster or even dismal, your cost-reduction efforts | | | | department to bring forward any suggestion or idea on |
| can ensure your survival. On the other hand, if sales | | | | cutting costs. Create multiple ways of passing along |
| are great, you can use them to achieve a banner year. | | | | each idea, such as: |
| Get everyone involved | | | | - Present it to your department manager; |
| Everyone can participate in cost-cutting efforts. Here | | | | - Share it with any member of your Quality Circle; |
| are a few examples: | | | | - Write it down and drop it in a suggestion box at your |
| Reduced travel - Many meetings formerly held in | | | | site; and |
| person are now managed by video-conference or | | | | - Call it in to a suggestion hotline (voice-mail). |
| simply by teleconference. Perhaps even senior | | | | Investments must continue |
| managers can reduce their in-person meetings from | | | | All of this emphasis on cost-cutting creates the danger |
| one a month to one per year. | | | | of cutting too much. The purpose of all of these |
| Increased use of e-mail - Communications that once | | | | measures is to ensure your ongoing profitability. |
| took place in person or by phone are now routinely | | | | Some things you should not cut. For instance, you must |
| done by e-mail. Even faxes are beginning to use | | | | not cut expenditures your need for facility upkeep or |
| network connections rather than more costly | | | | upgrades or to keep pace with technological |
| telephone lines. | | | | advances. Neither can you afford to cut back the |
| Economy of scale - By combining the purchasing | | | | service you offer to your customers. They must |
| power of multiple sites, you can reduce the cost of | | | | continue to receive the best service you can deliver, |
| routine purchases, such as uniforms, computers, and | | | | combined with the speed and accuracy they have |
| office furniture by obtaining volume discounts from | | | | come to expect. |
| your suppliers. Negotiating new leases for photocopiers | | | | In reality, these are all investments rather than costs. |
| and other equipment might save you thousands of | | | | You cannot afford to neglect your investments in |
| dollars per month. | | | | facilities, technology, and your people. The long-term |
| Increased utilization - If you can increase the | | | | costs would be too high. |
