Cost Reduction Analysis: Tools And Strategies

Discover the tools for knowing the costs your company should cut, without impacting its ability to deliver goods and services
New from Steve Bragg, this book provides the tools for determining which costs a company should cut, without impacting its ability to deliver goods and services. It explains how to use throughput analysis in order to locate bottleneck operations in a company, which in turn dictates where capital investments should (and should not) be made.
Delves into process analysis, to determine where excess resources are being used in a business process
Describes the total cost of ownership, showing how a single purchasing decision actually snowballs into a variety of ancillary costs
Shows how to create and use a spend management system to reduce procurement costs
Shows how just-in-time systems can be used to eliminate inventory costs
Cost Reduction Analysis: Tools and Strategies provides examples to show how much cost can potentially be eliminated to avoid drastic action later that can imperil your corporation's direction and future.

STEVEN M. BRAGG, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and an auditor at Deloitte & Touche. He received a master's degree in finance from Bentley College, an MBA from Babson College, and a bachelor's degree in economics from the University of Maine. He has been the two-time president of the Colorado Mountain Club, is an avid alpine skier and mountain biker, and is a certified master diver. Mr. Bragg resides in Centennial, Colorado. He is also the author of Accounting Best Practices and Accounting Policies and Procedures Manual, both published by Wiley.

About the Author.
Preface.
PART I PRIMARY AREAS OF COST REDUCTION.
CHAPTER 1 The Cost Reduction Process.
Introduction.
Need for Cost Reduction.
Advantages of Cost Reduction.
Disadvantages of Cost Reduction.
Cost Reduction Politics.
Cost Reduction Priorities.
Cost Reduction Tools.
Process Analysis.
Process Analysis Tools.
Key Cost Reduction Questions.
Cost Reduction Reports.
Metrics.
Summary.
CHAPTER 2 Selling and Marketing Cost Reduction.
Introduction.
Customer Mix Analysis.
Customer Class Analysis.
Sales Region Analysis.
Dropped Customer Analysis.
Price Setting with Throughput Analysis.
Sales Productivity Analysis.
Sales Effectiveness Analysis.
Salesperson Analysis.
Finding Throughput Problems in Sales.
Sales Process Flow.
Sales Deduction Systems.
Collections by the Sales Staff.
Marketing Cost Reductions.
Sales and Marketing Metrics.
Summary.
CHAPTER 3 Product Analysis.
Introduction.
Target Costing.
Targeted Price Increases.
Eliminate Unprofi table Products.
Add New Products.
Outsource Products.
Product Rework Costs.
Custom Product Costs.
Product Metrics.
Summary.
CHAPTER 4 Production Cost Reduction.
Introduction.
Throughput Analysis.
Product Line Complexity.
Production Flow.
Cellular Manufacturing.
Continuous Flow.
Monument Equipment.
Quick Changeovers.
Assembly Line Configuration.
Assembly Line Length.
Container Sizes.
Source Inspection.
Control Chart Analysis.
Mistake Proofing.
Expediting.
Maintenance Planning.
Machinery Standardization.
Machinery Assignment.
Metrics.
Summary.
CHAPTER 5 Payroll Cost Reduction.
Introduction.
Analysis for a Workforce Reduction.
Cost of a Workforce Reduction.
Alternatives to a Workforce Reduction.
Manage Payroll Expenses at the Hiring Stage.
Combat Institutionalized Pay Increases.
Restructure Commissions.
Restructure the Workforce.
Hire Contractors.
Other Types of Payroll Cost Reduction.
Worker Adjustment and Retraining Notifi cation Act.
Payroll Cost Metrics.
Summary.
CHAPTER 6 Benefits Cost Reduction.
Introduction.
Benefits Administration.
Disability Insurance.
Life Insurance.
Medical Insurance.
Pensions.
Seasonal Bonuses.
Sick Time.
Snacks.
Training.
Vacation Time.
Wellness Programs.
Workers' Compensation Insurance.
Miscellaneous Perquisites.
Free Benefits.
Metrics.
Summary.
PART II PROCUREMENT COST REDUCTION.
CHAPTER 7 Procurement Cost Reduction.
Introduction.
Standard Procurement Process Flow.
Procurement Cards.
Evaluated Receipts System.
Additional Procurement Process Flow Changes.
Supplier Consolidation.
Supplier Relations.
Additional Cost Reduction Considerations.
Metrics.
Summary.
CHAPTER 8 Spend Analysis.
Introduction.
Spend Database.
Spend Analysis.
Spend Analysis Reports.
Spend Analysis Rollout.
Third-Party Spend Management Systems.
Low-Cost Spend Management Systems.
Metrics.
Summary.
CHAPTER 9 Maintenance, Repair, and Operations Analysis.
Introduction.
Problems with MRO Cost Reduction.
MRO Cost Reduction Methodology.
Distributor's Viewpoint.
Metrics.
Summary.
PART III ASSET REDUCTION.
CHAPTER 10 Inventory Analysis.
Introduction.
Inventory Purchasing.
Inventory Receiving.
Inventory Storage.
Bill of Materials.
Obsolete Inventory.
Miscellaneous Topics.
Metrics.
Summary.
CHAPTER 11 Fixed Asset Analysis.
Introduction.
Fixed Asset Acquisition Analysis.
Fixed Asset Installation Reporting.
Postinstallation Audit.
Outsourcing Alternative.
Lease versus Buy Decision.
Feature Reduction Analysis.
Asset Commoditization.
Monument Analysis.
Facility-Specific Considerations.
Fixed Asset Retention Analysis.
Fixed Asset Maintenance Analysis.
Fixed Asset Location Tracking.
Fixed Asset Condition Tracking.
Fixed Asset Metrics.
Summary.
PART IV SPECIAL TOPICS.
CHAPTER 12 Throughput Analysis.
Introduction.
Theory of Constraints.
Operational Aspects of the Theory of Constraints.
Nature of the Constraint.
Definitions for the Financial Aspects of the Theory of Constraints.
Financial Aspects of the Theory of Constraints.
Opportunity Cost of Operations.
Locating the Constraint.
Management of the Constrained Resource.
Types of Policy Constraints.
Constraint Buffer.
Production Scheduling.
Batch Sizes.
Capacity Reduction Analysis.
Work Center Utilization.
Metrics.
Summary.
CHAPTER 13 Cost Reduction in Mergers and Acquisitions.
Introduction.
Integration Timing.
Integration Planning.
Synergy Realization.
Integration Manager.
Integration Team.
Integration Communications—Internal.
Integration Communications—External.
Employee Integration—Qualifi cation Assessment.
Employee Integration—Job Positioning.
Employee Integration—Relocations.
Employee Integration—Key Employees.
Layoffs.
Compensation Integration.
Sales Integration.
Process Integration.
Technology Integration.
Metrics.
Integration Pacing.
Summary.
Index.