Cost Reduction

Cost Reduction

As we look around, we find that money is assuming more importance than anything else in the world. One of the definitions of money is that money is what money does. The power of money is realised when we want to do work in life. It is therefore business of every business house to save the money, which in other words means that as much savings be done in every operation the company or individual is doing .In so far as this company is doing the operations of collecting cheques for deposit in banks, effort has to be made that the collection cost in terms of manpower should be be minimal.

That cost of collection be as low as practical.
The savings or cost control always begins at the design stage. One of the classical example is the hole made in the design of the dash board of jeeps for keeping cigarates for the soldiers who originally started using them in war time. However the same hole continued to be made even when the jeeps were used by general public Which was causing unnecessary cost , in terms of cutting a hole in the dash board and then fitting it with cigratte hold.Therefore one of the methods in cost savings is always to look in various aspect of cost and this review should be continuous This is just an example. Every organisation has to devise its own methods. The basic idea is that wherever the cost or money is spent that area must be continuously monitered to locate and loose ends found where the cost can be reduced.

It is not only in the design stage that cost reduction can be achieved but also in the efficacy of operations. Some organisations may be able to reduce cost by changing or modifications in the methods of operations which they do and continue to do over long period of time . What happens is once the employees do a certain operation in one method, they continue to do so without bothering about the need of such operation and relevant cost. For example in an organisation, the assistant was writing the names of the persons who took the grain along with the money draft he has already received for the cost. When questioned the reasons he had no clue as to what purpose this will serve. He was asked to make the total of the collections and compare with grain cost and see that both agree. In which case only one entry was necessary. This saved a lot of time of the assistant who was able to devote his time elsewhere thereby reducing the cost of book keeping.

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