Cost reduction in Low-cost Emerging Economies for Sustainable Growth - Principles, Processes, Tools & Techniques

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,

1. 1
   Value Analysis and Value Engineering
2. 2
   Cost-reduction through productivity improvement
3. 3
   Supply Chain Management (SCM)
4. 4
   Lean Manufacturing
5. 5
   Total Quality Management (TQM)
6. 6
   Control over fixed Costs
7. 7
   Working Capital and Fund-Flow Management
8. 8
   Inventory Management
9. 9
   Employee 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:

1. 1
   Profit achieved through cost-reduction activity
2. 2
   Cost-reduction as % to total Sales
3. 3
   Cost-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.