The Five Steps for Reducing Costs
Describe your Target – The target is the “area” we are seeking to improve. Most often this would be thought of in terms of a “process” but there is no restriction on how we define the target areas we are working on.
Identify Break Points – For the target area, all of the Break Points that exist need to be identified. They also need to be described well enough that we (and others) can easily recognize them at any time.
Describe your Actions – Describing your actions is the way you clearly identify the steps you could take to eliminate causes of work. By identifying Actions and the number of Break Points each Action will eliminate, the benefit from each Action becomes clear.
Do the Cost and Benefit Assessment – The Cost and Benefit assessment adds several items that are important in helping us build our Cost Reduction Plan. What we need to know is: How Much? How Long? How Beneficial?
Build your Cost Reduction Plan – Using the Cost and Benefit assessment we can now build our Cost Reduction Plan. We do this by choosing which Actions are to be taken, and the order they are taken in.
Let’s explore these Steps in more detail:
Step 1 – Describe your Target Area,
ideally in terms that are understandable to others in your organization. Your Target Area will often be a “process,” as this is one of the most common terms used in describing the work people do.
Step 2 – Identify Break Points.
For the target area, identify each of the Break Points that exist within it, then record them in a descriptive enough way that others (and you if you come back later) will immediately know what you mean.
Note – This may initially present a challenge as it is not something we commonly have done in the past. Persevere and do your best to identify the Break Points in your target area and enough information will be available for you to build your cost reduction plan.