From the course: Cost Reduction Tips - How To Cut Costs And Maximize Profits
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Top 10 things to measure
From the course: Cost Reduction Tips - How To Cut Costs And Maximize Profits
Top 10 things to measure
- So before you can cut costs you have to measure what your costs are, and this is a summary of the top 10 things that you need to measure. Number one, do a Pareto analysis of where the money is being spent. 80% of your cost goes on the top 20% of things. So, after people and materials, what else is taking your money? And within materials, again, what is the top 20%? Savings made on this top 20% will give you the biggest benefit, and investigating and negotiating and shopping around on these will be worth your time. Banning biscuits and Post-its will not give you anything like such a big payback, and it will only de-motivate people and make them less productive. So that's the first thing to do. Secondly, productivity of people is something that you should measure. Ideally you would work out the productivity of all of your key people, and if you could compare one against another you could work out why some people are producing more and some people are producing less. And remember, it…
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