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Cost reduction in Low-cost Emerging Economies for Sustainable Growth - Principles, Processes, Tools & Techniques
ISSN: 0148-7191, e-ISSN: 2688-3627
Published September 29, 2015 by SAE International in United States
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Cost-reduction and cost competitiveness have emerged as major strategic tools to an enterprise and are being used all over the world to fight for survival as well as maintain sustainable growth. Maximization of value-creation by enriching the planet, people and the economy should be the key drivers leading to cost-reduction strategies in any business.
The main objectives of this paper are to explain the Processes and Principles of Cost-reduction in technology-transfer to low-cost emerging economies to achieve sustainable cost-reduction and create a culture of cost-consciousness throughout an organization.
DivgiWarner has not only designed and developed but has also been practicing unique processes of cost-reduction utilizing various tools as,
- 1Value Analysis and Value Engineering
- 2Cost-reduction through productivity improvement
- 3Supply Chain Management (SCM)
- 4Lean Manufacturing
- 5Total Quality Management (TQM)
- 6Control over fixed Costs
- 7Working Capital and Fund-Flow Management
- 8Inventory Management
- 9Employee involvement through Kaizen, Suggestion schemes and 5-S
Cost-reduction is planned, measured and reported with the following three indicators being constantly kept in perspective:
- 1Profit achieved through cost-reduction activity
- 2Cost-reduction as % to total Sales
- 3Cost-reduction as % to Material Costs
Cost-reduction achieved for sustainable growth without compromising on the quality of products, and keeping the customer and supplier-base intact and an increase in the top-line on a yearly basis in line with increase in markets and economies.
For it to be achieved, cost-reduction has to be considered as a strategic and not just a tactical approach to overall cost-reduction efforts.
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- General Motors, - Quality System Basics
- BorgWarner's Global Star Safety Framework (GSSF) manual
- Dimancescu, D., Hines P., and Rich N., “The Lean Enterprise”, American Management Association, 1997.
- Mid-America Manufacturing Technology Center, “Lean Manufacturing Utilizes Multiple Tools To Help Companies Improve Performance Objectives,” The Manufacturer's Edge, winter 2000
- DivgiWarner Business Manual
- BorgWarner ‘BWPS’ Manual