Optimization of income and expenses in the organization. Reducing Enterprise Costs: Best Practices. Three ways to optimize costs

The main task of any company or enterprise is to make a profit. However, the amount of income depends not only on the amount of goods produced and sold or services rendered. The amount of profit is significantly influenced by the company's expenses. And the higher they are, the less profit, respectively. Therefore, one of the fairly common methods of increasing profits is cost reduction.

But what kind of costs can be cut so that there are no further problems?

What's the first thing to do?

The decision to cut costs for the company is a rather important step, which should be approached with full responsibility.

First of all, you need to make a complete list of absolutely all expenses. No matter how minimal and insignificant a waste may seem, it should certainly be on this list. Only with the information in full, you can make the right decision.

It is important to understand: it is simply impossible to significantly reduce the costs of the enterprise.

The compiled list of costs will need to be divided into two parts:

The first is the important costs that are necessary for the development and growth of the company. Lack of funding can lead to the collapse of the enterprise, so you should not cut these costs.
The second part is those costs that should be revised, and it is likely that some of them will be reduced.

Key costs that can be reduced

In any company, the list of expenses is significant. But with the right approach, almost all costs can be reduced to a minimum. In this case, neither productivity nor quality will suffer. The main thing is to analyze everything well, think over and draw up a clear plan of action.

One of the compulsory expense items. But you can shorten it if you want. You should not immediately think about how to get around the law. This is fraught with significant consequences and fines. Accordingly, unacceptable.

In fact, modern legislation is quite loyal to entrepreneurs. There are many different tax incentives available. Having carefully studied the current norms, you can find an article according to which the tax rate can be reduced, some benefits are applied.

Production cost

How can you reduce the cost of goods?

The first step is to revise the list of suppliers. In most cases, entrepreneurs manage to find a new supplier who offers the necessary raw materials at a more acceptable cost.

Another method of reducing production costs is to reduce the number of defective products. Basically, resources and raw materials are wasted on the production of a product that will never be sold, but will simply remain in the warehouse or be thrown away.

The third method of reducing costs is savings. Saving raw materials required for production, saving resources (electricity, water).

For example, modern equipment is less energy intensive than what was produced 20-30 years ago. By investing in manufacturing upgrades, you can increase productivity while using fewer resources.

Today many companies rent offices, production workshops and warehouses. Analyze how effectively the rented area is being used.

It is not uncommon for a warehouse to be filled only by a third. But at the same time, you continue to rent a large space "in case of an increase in production." But will this increase be?

In addition, the location of the premises is also important. Consider how important the fact that your warehouse is located in a central area of \u200b\u200bthe city is. After all, renting a similar premises on the outskirts will cost several times cheaper. The same goes for the office. If visitors do not come to you, and all communication with customers occurs through e-mail and phone calls, the office can be located anywhere, not just in the business center. And it is not at all necessary to rent an entire floor if you only need a few offices.

Service

Service maintenance is a fairly common procedure that many companies offer today. It applies to everything: water coolers, computer and office equipment, vehicle, machines and other things.

Sign a service agreement - this way you will pay a small monthly fee, and specialists will regularly inspect the equipment. And when the need for repairs arises, all this will be done in an extremely short time and at a significantly reduced cost.

Get rid of excess

Machine tools, equipment, vehicles - all of this is on the balance sheet of the company and requires periodic repair or inspection. But if all this does not bring any profit, a natural question arises: why is it necessary?

Reduction of staff and wages

Check how effective your employees are. Quite often there is an opportunity to reduce the costs of the enterprise by making some reduction. There are certain positions that do not affect the production process in any way.

For example, a company with only a small computer network of 5-6 computers does not need to hire three system administrators. One person can handle the job. Similar examples can be found in almost any field (accounting, secretariat, HR, and so on).

As for salaries, you should be more careful here - otherwise you risk simply losing employees. However, the system of penalties (for downtime, unfulfilled work or lateness) will help improve the workflow and save some funds. But along with fines, a system of bonuses should also be introduced (for processing, good performance, or any achievement). In this case, your employees, on the contrary, will be motivated and try to improve their performance.

How to cut costs correctly?

When planning to reduce company spending, you need to clearly plan your actions. If you cannot cope with such a task on your own, hire a specialist from outside. It will help determine the main sources of costs and make detailed plan actions aimed at reducing costs.

Try to control all innovations. That is, if you plan to reduce energy consumption, determine the person who will control this process, will ensure that the company's personnel strictly follow all instructions. Of course, this applies not only to electricity at any level; strict control must be exercised in any division.

Enter unscheduled checks - so your employees will follow the instructions at all times, and not only when they are watched by a controlling person.

There is a question that worries most entrepreneurs, heads of companies and enterprises. And when will the effect of the introduced innovations be noticeable? When will costs go down?

It should be understood that this is a gradual process. Yes, the difference in spending will be visible after a month. But most likely, this difference will be insignificant. An integrated approach, strict control and strict adherence to instructions will give the desired result. But it will become noticeable only after 3-5 months. Much depends on which cost cutting methods you decide to use.

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How to reduce costs in the enterprise

The primary task for the owners of any enterprise is to increase the efficiency of the business and develop it, while developing a plan.

Currently, there is no comprehensive solution to reduce costs, most tools allow you to manage only one of the components of the business.

Some businessmen believe that the solution to the question of whether how to reduce costs at the enterprise... it is possible by spending funds from the cash desk or the company's current account. This is a common mistake. Payments to the cashier are made after a preliminary agreement and commitments made earlier. If the manager manages only payments, he will soon realize that there is absolutely not enough finance. To prevent this from happening, in no case should you increase the credit resource, but all possible income and expenses of the enterprise are necessary. So, you need to draw up a financial plan - short-term (for a month) and long-term (for a year) and update it periodically.

When planning the expense of finance, financial discipline must be strictly observed. Manager's decisions are violated only in extreme cases. The leader is always the main one in the process of how to cut costs.

The manager must have accurate information about the company in his hands. Based on it, he makes decisions about management impact. If the enterprise measures the elements of the cost of remediation of defects, then within the framework of the cost reduction program in the enterprise it becomes possible to set a goal for the divisions of the company. Monitoring the fulfillment of goals is mandatory.

In order to carry out systematic work on the issue of how to reduce costs, the company will have to introduce a financial planning and control system. Such a system gives a positive effect already in the fact that the company no longer receives excess credit resources, which means that there is a significant saving on interest on payments.

Cost reduction at the enterprise can be done as follows:

- to make a detailed inventory of the company's expenses (task for the financial and economic department);

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- determine the category for each item of expenditure (high priority, priority, eligible costs, unnecessary expenses), after which an analysis of the amount of costs for each category is carried out and an analysis of the consequences of avoiding unnecessary costs;

- completely stop financing unnecessary costs if the goal is to minimize business costs. In a critical situation, spending on an acceptable category is sharply limited.

Having done all this, you can move on to the next stage. For this, a working group is formed from the heads of the company's divisions. At the meeting, the factors that affect the emergence of certain costs are worked out and methods are prescribed to reduce business costs for each item. Usually there are 4 areas of work:

1. Analysis of the feasibility of production technology and the choice of more economical

A constant analysis of the amount of costs is required:

- whether the technology meets the optimal standards;
- appropriate loading of production capacity, rhythm, no interruptions in production;
- elimination of failures in the shipping system, because storage is much more unprofitable, and full warehouses lead to a production stop;
- whether the personnel of the enterprise adheres to the production technology;
- what are the fluctuations in production volumes, are they accompanied by an adequate change in the number of personnel and wages.

To fully control costs... a full management cycle is needed: create a regulatory framework, make forecasting, correlate norms with a plan and monitor costs.

2. Procurement management

- centralize purchases;
- to reduce purchase prices;
- to form a supplier base;
- to introduce personal responsibility for buyers for the cost of procurement costs;
- detail the procurement budget by agents, quantity, nomenclature;
- carefully prepare tenders - correctly draw up documents, determine the transparency of the choice.

3. Optimize the headcount and payroll

Staff cuts are painful, but very effective method reduce costs at the enterprise. When a company grows, it invariably attracts a large number of specialists. If she has grown too much, a significant portion of her income will go to the payroll.

Remember that a large number of people increases the loss of wages and social security contributions to the company, and also increases the cost of maintaining jobs. It is necessary to analyze which departments are really needed and which are not, which will reduce costs in the enterprise. That is, in order to optimally cut costs, the company needs to remove unnecessary personnel. But it is worth cutting only really unnecessary personnel, and not giving a task to heads of departments to reduce the number of people by a certain percentage.

4. Optimize business processes at the enterprise, reduce non-production losses and increase labor productivity in departments

The company must use the concept of "Lean production": any actions are considered from the point of view of the Client - whether they create value for him or not. So you can distribute all the activities of the enterprise:

- actions that add value to the final product;
- actions that do not create value, but are inevitable;
- actions that have no value.

If we analyze the activities of the enterprise from the point of view of the Client and at the same time solve the problem of reducing costs, then the results will be excellent. Due to the transition to Lean production, the enterprise, at the expense of its resources, significantly increases the turnover of funds, frees up personnel for solving other tasks, shortens the production cycle, minimizes losses and improves product quality.

These measures are entrusted to specialized units, and these units must provide a plan, how to reduce costs at the enterprise... with expected results and responsible persons.

Ways to optimize and reduce costs in the enterprise

Costs are an integral part of any business; without them, the company cannot develop or simply work. However, to ensure profitability, costs are required to be efficient, that is, every ruble spent is profitable. By setting such a goal, the leader will be able to save his company from unproductive costs. However, not every CEO sees optimal ways to reduce costs .

Three basic principles of work to avoid unnecessary waste

Planning

Some directors mistakenly believe that cost reduction at the enterprise will happen if they begin to strictly control the spending of money that is already in the account. At the same time, no attention is paid at all to where this money in the account comes from. If you manage only payments, the enterprise will soon begin a chronic shortage of funds, and if loans are actively attracted, then bankruptcy is not far off. Cost reduction efficiency depends on how the accounting and expenses are kept. and income. Moreover, both of these articles need to be planned in advance. It is advisable that the manager always has in front of his eyes the planned volumes of income and expenses, broken down into months, quarters, years. Some investment projects may seem costly in the short term and very profitable in the long term.

The manager should have in his hands objective, not embellished, information about his enterprise. The ability to control costs appears from the moment they begin to be taken into account. Many enterprises have developed the following cost reduction strategy... a cost cutting department is created, its employees

study the factors affecting costs;
check the compliance of technological processes with the standards that were laid down during the design period of the enterprise;
calculate the optimal load of production shops;
find out the reasons for interruptions in work;
control the presence of failures during the shipment or acceptance of goods;
reveal the warehouse packing, etc.

Then happens cost analysis and optimization... that is, employees outline a program to reduce identified costs, and the manager reviews and approves it. The points of such a program can be: centralized purchase of basic raw materials, more efficient work with clients, etc.

Discipline

All cost reduction strategies are approved by the head, they are reflected in the company's budget. Violate decisions taken possible only in exceptional cases. Financial services must be responsible for enforcing this rule. Their responsibility is to monitor the reasonableness of the costs and cut off unnecessary spending. Strict financial discipline must be confirmed by the order of the head. in which it is indicated that the decision on expenses is made by one or more responsible persons appointed by the director.

Three ways to optimize costs

Express reduction

With this method of dealing with costs, you need to immediately stop paying costs for some items. To do this, analyze all ways to optimize costs and find out the possible consequences. The costs are divided by importance into:

1) High-priority is the purchase of raw materials, the issuance of salaries to key workers, etc. Without such costs, the enterprise will stop its activities.

3) Permissible - sanatorium treatment and other employee benefits. Funding is desirable. but it is not necessary to save, especially if the company does not have free funds.

4) Unnecessary - for example, payment of rest for the head. The operation of the enterprise will not be affected in any way by the cessation of financing unnecessary costs.

If express is selected cost reduction strategy... then financing of the last category stops, the costs of the third are sharply limited. It is undesirable to cut costs in the first two categories.

Reduce enterprise costs quickly

1) Saving on raw materials and materials. Cost Optimization Ways for this, the most expensive, article may be different. The most effective is the revision of contracts with suppliers. Cooperate with large companieswho can offer lower prices and payment deferrals.

2) Cost analysis and optimization for transport, telecommunications, electricity.

If the direction of the company's activity is not the provision of transport services, then the transport department can be outsourced. You also need to consider the possibility of reducing the vehicle fleet and contact a logistics company that will help minimize transport costs.

The most common ways to reduce costs on electricity: control of energy consumption, limited lighting at night, switching to energy-saving lighting and equipment.

Communication costs will be reduced if the list of employees using mobile communications paid by the company is reduced. Reduce the number of long-distance telephones, limit Internet access, negotiate with a major telecom operator for package services.

3) Reduction of personnel and payroll. Consider the need for some departments. promotes the dynamic development of outsourcing and freelancing. Many functions of the company can be transferred to third-party companies and specialists. In addition, various recruiting organizations make it possible to reduce unqualified personnel. For example, technical equipment can be “rented” several times a week for a couple of hours. More democratic way to reduce costs - cut wages, but provide workers with social benefits: free meals, extended health insurance, etc.

Systematic reduction

1) Investment management. Investments in the purchase of new equipment and in the introduction of modern technologies are necessary for the enterprise to maintain its competitive advantages. But when deciding to invest in any project, do not forget about the previously set task - increasing cost efficiency... Investment projects must undergo a rigorous selection process. First, the department that needs the project must justify its feasibility. Then it is advisable to invite independent experts who will make a feasibility study and help you select the most promising and profitable from several proposals.

2) Procurement management is a systematic search for profitable suppliers.

3) Business process management. This work is hindered by the stereotypes that have developed since the days of the USSR. Most of today's technicians are asked how to achieve cost reduction at the enterprise... will answer: buy new productive equipment. Meanwhile, business processes have undergone revolutionary changes long ago. For cost efficiency some enterprises use lean thinking technology. The bottom line is that the costs are estimated from the point of view of the client: will he agree to pay them. The buyer would not pay for rejects and alterations, overproduction, movement of goods, stocks, waiting, etc. Nevertheless, these operations have value, which means that the costs of them need to be reduced or completely eliminated those processes that the consumer would not approve.

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Ten rules of cost control

Do not seek to "kill" costs, they need to be made "obedient", that is, learn how to manage costs. In some cases, it is useful to increase them.

"Rule of efficiency" - each unit of costs should bring the maximum result, or - to achieve a result, you need to minimize costs.

Costs arise, both with any action, and with inaction.

You don't need to be a maximalist. Even minimal cost savings or keeping them at the same level is a good result.

On ways to optimize costs there are no trifles. Resign yourself to being called bored and paranoid. Require employees to save paper, electricity, water, etc. Having got used to saving on trifles, subordinates will begin to be careful about large-scale costs.

Costs cannot be reduced without spending a penny on it.

There are useful costs that can save you from big losses (insurance, security, quality improvement).

Cost analysis and optimization Is a race without a finish. This work has no completion date, it is daily, planned, routine.

All employees must fight costs, but each must be assigned an individual "combat" task.

Coming out on the "warpath" with unnecessary expenses, arm yourself with a pencil, paper, calculator and distrust. Any noticed inefficiency or flashed in the head idea to eliminate it should be kept not in memory, but on paper. Do not trust employees who do not back up their words with numbers, and if they do, then the numbers need to be checked. In the fight against unnecessary costs, the paranoid win.

Reducing enterprise costs

Every business spends finances on manufacturing goods or providing services. Profit is considered to be the difference between the amounts spent on production and gross income, which is also called turnover. In some cases, increase the flow money it is possible by understanding which items of expenditure can be reduced, but this must be done very carefully so as not to harm the reputation of the company and not reduce the quality of the products.

What does the company spend money on?

Any enterprise has its own specific items of expenditure that help it to function fully. All of them can be intelligently optimized, which will certainly bring higher profits and lower costs. You have to invest in the following needs:

salary;
purchase of raw materials;
transportation of materials and finished products;
taxation;
advertising;
maintaining large clients;
rental or maintenance of premises;
communal payments;
maintenance and repair of production machines and units;
other expenses.

Before reducing the costs of the enterprise, it is worth carefully reviewing each of their articles and concluding that it is advisable to optimize.

Salary

Any enterprise has hired employees who perform a specified amount of work for a certain remuneration. The legislation of Russia states that the employer can independently regulate the level of wages, decrease or increase it.

However, keep in mind that there is a maximum allowable rate of reduction in wages, and an employee cannot receive less of it.

To optimize the item of expenditure on salaries, you can take the following measures:

to reduce the staff;
use outsourcing services;
transfer employees to part-time;
use part-time work;
to reduce the staff of the administrative apparatus;
automate production in order to partially or completely abandon manual labor.

All these points will be effective only if their application does not negatively affect the ultimate goal of each production - profit. For example, firing a high-paid wood processing specialist and hiring a less qualified, but cheaper employee in his place can lead to a decrease in the quality of the products, and this entails the loss of potential buyers. It is for this reason that any manipulations with wages must be thought out to the smallest detail.

Purchase of raw materials

What we manufacture the product from is also quite expensive, especially considering the recent devaluation of the ruble and the massive use of imported materials. However, this cost item can also be reduced by doing the following:

search for more profitable partnerships with suppliers;
assistance with producers of raw materials;
bulk purchases in conjunction with other companies to receive volume discounts;
implementation of design changes in production to switch to other materials;
independent production of some components, spare parts, etc .;
transition to cheaper analogues;
replacement of imported raw materials with domestic ones.

It is necessary to translate these actions into reality very competently and intelligently so as not to reduce the quality of the final product. For example, for the manufacture of chocolates, it will be more expedient to purchase high-quality cocoa beans, but switch to more affordable packaging, so you can keep the same product composition, but its cost will be lower than before.

Transportation of materials and finished products

Production costs for transport are sometimes fabulous, because raw materials need to be transported from different states or even continents, and the delivery of finished goods must be carried out throughout the country. In this case, it will be beneficial to use the services of logisticians or create such a department in your company. This will maximize the productivity of the transport, since it will travel with loads in both directions, respectively, the cost of driver's labor and fuel will decrease. You can also consider working with suppliers of materials that are located closer to your company.

To sell a product at a bargain price, you need to correctly present it to the end customer. This is what they arrange for advertising campaigns, the costs of which are often very high. To reduce this cost item, you need to revise the following factors:

the budget, perhaps, it is too high and can be reduced without prejudice to the final result;
search for new employees, sometimes well-known advertising agencies offer their services at inflated prices, in which case it makes sense to start cooperation with younger and more financially affordable companies;
estimation of advertising profit: it is worth finding out whether advertising is effective, whether it brings more profit than the entire advertising budget, if the indicators are positive, then the companies perform their functions, if not, then you need to look for the reason for the failure;
settlement with advertisers on barter, this method of cost reduction will be effective if you have something to interest advertising agency, it can be either a product or a service.

If you do not get these results while reducing pr costs, then the savings will be ineffective. It is for this reason that each point of cost reduction needs to be carefully reviewed and analyzed.

Maintaining large clients

Each production makes certain concessions to its large customers and makes special offers for them, implements loyalty programs, gives additional services... All this entails significant costs that reduce the level of profit. You can refuse the most expensive services, for example, SMS notifications of customers about promotions, constant mailing of letters to e-mail, and more. At this point, you also need to weigh the pros and cons of saving, because the refusal of some services can negatively affect the company's image and reduce the number of its regular customers.

Rental and maintenance of premises

Any production has a certain area, which is necessary for the comfortable organization of all work processes. It can be a small hangar, or a huge territory of several hundred hectares with premises and workshops for various purposes. Regardless of the size of the premises, you need to pay rent for them or spend money on their maintenance. You can reduce this expense item by using the following tips:

revision of the terms of the current lease in favor of the tenant;
moving to another premises, which will be more cost-effective;
the possibility of subletting some area;
purchase of rented premises, if appropriate.

If you are the owner of all the premises and buildings of the production, you can reconsider your costs of maintaining them in a safe condition for work. Regular maintenance and overhaul repairs can be done using cheaper materials, premises can be cleaned without cleaning companies, but with the help of hired employees.

Communal payments

Enterprises use natural resources for their activities, the payment for which is now quite expensive, given the special tariffs for industries. The following measures can help reduce this cost item:

establishment of stricter control over energy saving;
implementation of energy efficient production processes;
transition to bill payment for services.

Equipment maintenance and repair

To ensure that production does not stand idle, you must always keep the equipment in good condition. High-tech machines are most often serviced special companieswhose services are not cheap. You can also reduce waste on this if you reconsider the following factors:

delay for a long or short period of the current repair of units;
refusal of the services of contractors and repair of cars with the help of their employees;
revision of the terms of the contract with contractors in favor of the company;
search for more affordable firms providing service.

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Types of production costs

Economic costs are business expenses missed by the entrepreneur at the time of production. These include: resources, company purchases, company resources, not included market turnover.

Accounting costs are various payments made in order to acquire the right factors for manufacturing. Bookkeeping costs are real costs incurred to purchase sources from external producers. They are distinguished by direct and indirect costs. Costs that were only spent during manufacture are direct costs. Indirect costs are costs without which the company could not function - indirect costs.

Opportunity costs are expenses spent on creating products that the company for some reason is not going to produce. Costs that could exist but are missed are opportunity costs. Costs contribute to the increase during the rise in production. They are an indicator of the optimal size of production in the current conditions, because everyone understands that production will not expand indefinitely. The costs can be divided into:

Fixed costs (FC) are costs that a firm will incur regardless of the volume of production. These types of costs include: property taxes, money for equipment, wages, rent.

Variable costs (VC) are those costs of businesses that change as production grows. These include: payment for the labor of hired workers, taxes and VAT, transport services, raw material expenditures, etc.

3 KPIs for manufacturing that work without losing quality

How to determine production costs

Total costs (TC or C).They can be determined by the following formulas: TC \u003d FC + VC and TC \u003d f (Q).

Average fixed costs (AFC) - AFC \u003d FC / Q, where Q is the number of manufactured products.

Average Variable Cost (AVC) - the volume of variable costs per unit of output that the company produces. Formula: AVC \u003d VC / Q

Marginal Cost (MC)- the costs associated with the manufacture of an additional unit of production. It can be calculated using the following formula: MC \u003d ΔTC / ΔQ \u003d ΔVC / ΔQ.g8g

How to reduce costs by optimizing production waste

There are not so few ways to make money on production wastes if two conditions are met: strict accounting of waste and their prudent use. In the article of the electronic magazine "General Director" manufacturers of completely different goods - windows, down jackets, flour, confectionery, electrical systems - tell about the experience of waste disposal.

How to keep track of production costs

The costs associated with the transformation of trading activity are distribution costs. They can be divided into closely related to the progress of production in the functioning of circulation and those that are caused by buying and selling. Costs are derived from costs seen during the movement of goods to the buyer and costs that are associated with product development, production and sales of goods in catering establishments.

Items of distribution and production costs:

Transport services.
Wages to employees.
Social need.
Rental and equipment costs
Depreciation of fixed assets.
Repair expenses.
Packaging and sorting of goods.
Promotion costs.
Loan interest.
Decrease of waste of equipment.
Fuel consumption, gas, electricity

Operating account related to production costs:


Depreciation of fixed assets
Operation of goods
Cash expenses of enterprises
Credit expenses of enterprises
Tax arrears
Social insurance contributions and employee benefits
Employee salary
Costs included in transport distribution costs
Lack of goods
Cash surpluses
Shortage previously accepted by trade enterprises
Circulation costs that are written off to the sales account at the end of the reporting period

Rules for effective control of production costs

The costs will be lower if you take them into account. For example, a company can monitor phone calls to reduce telephone costs. Employees will stop calling personal affairs and then the costs will decrease.

The team at work should strive for a common goal - to reduce company spending. By talking with employees about how important it is to reduce costs, you can get recommendations for saving money.

It is necessary to systematize personal costs depending on the volume of production. Costs are divided into fixed and variable. It is possible to systematize variable costs depending on how easily they can be adjusted when the production activity changes. Real spending on materials, for example, increases or decreases in response to changes in production volumes. And by reducing the staff, reducing salaries, it is possible to improve labor costs. But direct labor costs are allowed to be corrected only if the management of the company is able to take appropriate measures (staff reduction, reduction of salaries, etc.). On the other hand, management will struggle to reduce rental costs if productivity falls.

Try to track not only the structure of expenses, but also the reasons for their appearance at the enterprise. By eliminating the cause of the unpleasant rise in costs, the costs themselves can be eliminated. For example, with high entertainment costs, find out why a lot of company money is spent: to increase customer base, during which the number of successfully concluded contracts grows or because control over the spending of representative funds is not conducted.

Optimizing cost management: 7 rules for dealing with costs

Ways to reduce production costs

Optimization of production costs

1. Warehouse logistics. Often the reserves with which you can reduce costs are located there. In particular, old equipment is often used to control the quality of raw materials. There were cases when raw materials were accepted with parameters that did not meet the requirements of technology. Subsequently, the production process was disrupted, and the cost of energy and the use of raw materials increased. If you buy new equipment, you can get both cost savings in production and effective work with suppliers.

At various enterprises, due to the fact that there were not enough warehouse workers and the time was limited to unload the wagons, they did not weigh wagons with raw materials. As a result of checks, it was found that the underweight was about 10%, and the supplier was to blame. Bottom line: losses at the enterprise from the volume of purchases were greater than the wages of employees.

It also happens that the raw materials can be in the open air. Raw materials lose their chemical properties and the technology is disrupted during production. This problem increases the volume of raw materials that are required at the time of manufacture and causes an increase in the use of other resources, for example, electricity. Defective products can also be obtained.

2. Transport logistics. Internal (moving around the enterprise) and external logistics of the enterprise (delivery of raw materials or finished products) are often poorly organized! Executives are often faced with problems of inefficient use of the vehicle.

For example, the company organized work with clients, determined the smallest sales volume, but did not agree on the smallest delivery volume. Scope of delivery is very important, as the price on delivery can significantly affect the income per order.

Problems related to suboptimal movement of raw materials and unfinished products are internal logistics. For example, raw materials were unloaded for incoming inspection, then they were transported to prepare for production, and later transported to get to the shop. As a result of the following unorganized logistics, the company incurred costs and lost raw materials during diving and transportation.

In different companies, transportation costs were reduced, but at the expense of not very visual solutions. So, in one firm, drivers could go to lunch in work cars. And nobody cared about it. The fleet consisted mainly of trucks and tractors, so the cost of such lunch trips significantly increased the costs for the firm. In this regard, the company executives made the purchase of a minibus, with the help of which they could transport employees for lunch. Here's an easy way to cut costs.

3. Purchases. Despite good tendering procedures, this will not lead to automation of procurement costs. It is not only corruption that is to blame for this, which, say, has not been absolutely eliminated anywhere. The essence of the problem often comes from the organization of the process, and if it is revised, then it is possible to get a reduction in costs. Let's see the possible changes:

Elimination of unnecessary formalization. It happens that with the maximum regulation of procurement control, not a good result is obtained. The whole point of the purchasing department leads to the usual collection and writing of papers. But the most important essence of employees' work is finding a good supplier and concluding a contract with him. In significant firms, each tender committee meeting goes for 15 or more purchases. It is clear from this that it takes a lot of time for procurement service workers to prepare a tender, analyze suppliers. But detailed development of each purchase is impossible due to lack of time.

Not many purchases can be analyzed in detail. The main point is to determine the suppliers that are in the priority of the company, because they can provide the bulk of the supply with good conditions. Finding alternative suppliers eliminates the risk. At the tender, you can bring up a question about the best or not so good suppliers and approve the conditions for working with him. Whose conditions are more favorable, those suppliers will be selected.

Improved coordination between production and technical services and procurement. When technical and purchasing teams work together, costs can be reduced. Determine the required change in production indicators and submit other variations in the requirements for materials and components. This action will assist in planning, selection of suppliers, help to find out the best price and quality while optimizing costs.

An independent assessment of the current conditions for working with suppliers and the search for potential suppliers. Analyze the market situation and find suppliers can independent company... At the initial stages, open source is analyzed in order to compile a complete list of potential suppliers and determine general level prices. Next, you need to negotiate with a number of potential suppliers about possible prices and purchase conditions. This will show the leadership positions in the firm a new tender campaign and invite a wider audience. In this situation, you may find that the firm can buy material much lower than before.

Practitioner tells
Vadim Afanasiev, Leading Analyst, Samara Oxygen Plant CJSC

In recent months, we have become much more attentive to work with suppliers, we are analyzing the prices of purchased materials more carefully, especially since the cost of many resources has decreased.

We have very complex logistics: both small and large-capacity transport are used. For the transportation and storage of liquid products, we use rail transport, as well as many mobile and stationary tankers. In addition, due to physical laws, liquid gases cannot be stored for a long time, and their losses are irreversible. Therefore, we now pay great attention to the optimization of logistics and storage. We calculate everything to the smallest detail. A clear forecast of sales, production of the most accurate volume of products, optimal delivery - everywhere we save a little bit, and on an enterprise scale it is millions.

The state presented business with a “gift” in the form of an increase in electricity tariffs. Therefore, we have to deal with energy efficiency issues. We analyze the operation of all equipment very carefully. For example, in our production we use air separation units, the optimization of which has already yielded a tangible reduction in electricity costs.

We also try to save on business trips. We travel only if it is really necessary and the solution of the issue requires the presence of our employee on site. Instead of air travel, we use railways.

4. Manufacturing. Considering that a large number of companies reduce or suspend investment projects, we advise you to focus on a direction that can reduce costs at the time of production, excluding the accounting of own investment.

Implementation of lean manufacturing tools. There is no point in dwelling on the lean manufacturing method. I would like to note that during practical actions, it gives significant economic effectbut it can take a long time to implement. This situation is connected with the fact that the result of the reduction in this situation does not occur instantly, but is achieved during production changes in the personnel culture.

Effective accounting and control of the use of inventory and waste. Implementation effective system accounting and control of inventories and waste is aimed at reducing costs through more efficient use of them. Most russian enterprises the volume of waste and control over their use are poorly taken into account. At the same time, the cost of such waste can be significant even in comparison with the cost of the finished product, and many industrial waste, with the help of minor processing, turns into a product in demand.

Administrative expenses

Administrative expenses are mostly fixed, most of which are direct costs - employee benefits, bonuses. These costs are the main factor in the growth or decrease of some other costs in management: due to the increase in the number of workers, rent may increase, transport services... In order to reduce management costs to the maximum, it is necessary to regulate the costs of employees.

1. Reducing costs without reducing the number of employees. Cutting costs without layoffs seems to many companies the most preferred option: it allows you to retain employees in the company and not to worsen the corporate culture. The only caveat is the short-term nature of the effect achieved.

The potential for staff reduction lies in some areas:

reduce administrative and transportation costs, travel and rent;
cut salaries, the cost of medical insurance, the cost of corporate events, revision of the daily routine.

All of the above actions can solve the issue of reducing costs without laying off employees.

2. Change of organizational structure

One of the tools to reduce the number of workers is to change the organizational structure. This structure is far from perfect in Russian companies. It differs into “flat” at the top and “narrow” at the bottom.

A consequence of the large number of workers who report to the CEO is a “flat” structure. Usually, the number of such people reaches 7-10 people, and sometimes 15.

When no more than three bosses are subordinate to the leaders, then the structure is called "narrow" at the bottom. This action leads to problems that arise between functional units, between project managers and executives.

For a company to perform better in times of crisis, it needs a flatter bottom structure. This is accomplished in three ways:

enlarge structural divisions (merging of two departments);
reduction of intermediate levels of management (for example, the abolition of departments and subordination of the heads of departments directly to the head of the directorate);
establishment of the optimal number of posts and the number of departments (for example, up to seven to nine people in a department, at least four departments in a department, at least three departments in a department).

The enlargement of structural divisions and a decrease in management levels will reduce costs for middle managers - heads of departments and departments - with the smallest change in the volume of functions performed and without the dismissal of ordinary employees. For example, a company that runs a large holding company has been able to cut staff costs by $ 1.5 million per year by eliminating intermediate management levels and consolidating divisions.

3 ways to reduce production costs by 20% in one year

Practitioner tells

Andrey Evseev, General Director of Tula Transformer Plant CJSC

All our production personnel work piece-rate, so a decrease in the volume of orders automatically led to a decrease in piece-rate wages (the piece rates themselves remained the same).

To reduce the cost of remuneration of management personnel, a reduced (four-day) work week (the same applies to piecework workers). All employees can use the additional day off at their discretion, including for part-time work on the side. In my opinion, a shortened week is better than a part-time work, since people have a full day free.

We do not have superfluous employees among the management and engineering staff, so there is no one here to lay off. As for production workers, pieceworkers, they could be reduced, and then, while maintaining the general wages fund, it would increase average salary... However, the workers themselves do not want this, for fear of becoming unemployed.

3. Reduction and redistribution of functions.

Functional optimization can be carried out in some areas.

Reducing the number of reports, sources of processed information and the level of detail. Executives are often overwhelmed with reports that are too cumbersome and poorly structured. Reducing the level of detail in reports will result in a 20-30% reduction and can improve the agility of management decisions.

Transfer of functions of permanent structural divisions to project units (working groups) and collegial management bodies. In one company, a decision was made to liquidate the full-time unit dealing with the integration and restructuring of new assets and transfer its responsibilities to a working group consisting of representatives of different functional blocks. This has yielded good results in terms of cost savings.

Allocation of functions to common service centers and their transfer to outsourcing. An example is the transfer of IT support and administration functions to a third party. This has an effect, since in the search for new clients, some of these firms have lowered prices for their services.

Lean Manufacturing: Small Steps for Bigger Goals

Practitioner tells

Mikhail Semenov, General Director, Qbik, Moscow

Our company manufactures and installs mobile structures at fairs and festivals. We call a unit of this design (space for one seller) a cube. When we first started production, it was expensive to install one cube, since the consumption of materials was not taken into account. Gradually, we began to work on reducing costs. A special scientific center was organized, which included an architect, designer, head of the production department and the General Director. Every two weeks, heads of divisions survey employees for any suggestions or ideas for optimization, and then submit them for discussion at a general meeting of directors in the center, which takes place once a month. I'll tell you about some of the implemented ideas.

Standardization of cube elements. The sizes and shapes of all elements of the cube were standardized and described in a special regulation. For example, the front and rear posts of the cube were unified, which made the work of installers easier: today they do not need to think about which post and which side to fit. As a result, the time required to assemble the cube was reduced. In addition, its size has become more compact (now it is 15–20 cc smaller) without loss of functionality.

Waste minimization when sawing beams and slabs. The architect, together with the director of the production department, compared the standard market sizes of the raw materials with the cube parts. As a result, each beam, each board and slab was lined so that no more than 5% of the materials were wasted. For example, earlier one OSB (oriented standard board) was enough only to create a floor. Now you can make both the floor and the table from it. For the manufacture of pillars, a whole timber used to be completely consumed, but now material remains for the table leg, which on a production scale has reduced costs by 4%. The method of cutting all types of beams and slabs is fixed in the regulations, which each production employee must adhere to. We do not throw away 5% of waste - they are used to decorate structures and repair cubes.

Construction. Previously, we made identical cubes that lined up. And now we collect only the first cube, and add the rest to it. Due to the fact that the cubes have common elements (for example, one common wall), wood consumption has been reduced by 8%. Plus, the one-piece design is stronger in itself.

Increased structural strength. The head of the production department at the next meeting proposed to equip all the poles with wooden inserts. At one of the festivals, we were convinced of the effectiveness of this idea: a tree fell on the cubes during the hail, but this did not affect the design in any way.

Reusable cubes. Previously, self-tapping screws were used when assembling cubes. When the cube was assembled for the second time, it was necessary to make new holes for the screws, since water got into the old ones and corroded the structure from the inside. Now we fix everything with bolts. Holes for them are made during the manufacturing process and then reused. Cube installation time has been reduced by 20 minutes, and there are no more holes. We plan to improve the mount in the future.

Production of related products. When we were building the festival site in Monaco, the organizers asked to install not only cubes, but also a swing for children and other elements. Then we got the idea to expand production. Now we also make swings, tables and much more. There was no need for expansion of capacities and changeover of equipment. Only wood purchases have increased.

From February to June 2015, our center's work to optimize production costs helped to reduce costs by almost 14%. Now, for each new product that is launched into production, we immediately draw up a standard (how to cut the source material, how to assemble, etc.) so as not to repeat the mistakes made at the dawn of the release of our first cubes.

Typical mistakes made in reducing production costs

Determining the most important cost items that need to be reduced is one of the mistakes that are typical for enterprises. The management always knows about the biggest expenses of the company. But as the firm grows, the business becomes more complex, and managers cannot always change the rise in costs at some points. A firm, for example, pays attention to the most obvious, but cannot notice unjustified costs from the category of others.
Failure to identify the most significant costs is a big mistake. When a firm seeks to keep production costs as low as possible, it may increase production but fail to sell it. As a result, the desire to reduce production costs per unit of production will lead to their increase due to the large volume of production. If you replace this action by reducing production costs, productivity will increase.
Losing the identity and competitiveness of a company's products if they are of good quality is a detrimental consequence of reducing costs. Despite the fact that by cutting expenses, you can get an increase in income. But in the long term, this action will cause undue harm to the company. In particular, a store of stylish accessories may help out some revenue while saving on selection and training staff. Still, such a parsimonious move will undermine the store's credibility and lead to fewer shoppers.
Broken relationships with suppliers, workers of the company, due to inconvenient conditions for their work.
Loss of important employees while reducing costs on critical sites.
Lack of understanding of the mechanism of interdependence of company costs. Indeed, sometimes a general reduction in costs can be achieved by increasing them for a particular type of activity. Example: Increased travel expenses may result in contracts with new suppliers who sell raw materials and supplies cheaper than older suppliers.

For all other managers, the scheme for making a profit is extremely simple:

Profit \u003d Gross income (turnover) - Expenses (distribution costs)

It doesn't take a math genius to see three ways to increase profits:

to raise trade turnover, leaving expenses at the same level;

reduce costs at the same turnover;

increase gross income, reduce costs.

The third way is the most profitable for any owner, but it requires skills and serious knowledge. In practice, most entrepreneurs, intending to increase their income, start by increasing their advertising costs and other marketing tools, without analyzing or managing their monetary resources. The fussiness of actions, as usual, leads to patching holes and the formation of a heap of new problems. Most often, for such careless owners, the next stage of "debriefing" is to find the guilty ones and punish them.

In two of the three proposed ways to increase profits, reducing costs can significantly affect the amount of net income. Our portal has already written about reducing distribution costs - Reducing distribution costs: sources of profit in the company.

Profit becomes unmanageable if cost control in the enterprise is not put to the proper level. Each item in the expenditure side of the balance sheet must be analyzed and minimized.

The break-even activity of the enterprise is calculated using the formula: Gross profit \u003d the sum of all expenses. Breaking even is a major milestone for new businesses, with a quick start to making their first profit. However, a break-even activity cannot positively characterize an enterprise that has been operating for a long time: if the company does not make a profit, it becomes bankrupt.

In the direct analysis of the actual cost of manufactured products, identification of reserves and the economic effect of its reduction, the calculation is based on economic factors. Economic factors most fully cover all elements of the production process - means, objects of labor and labor itself. They reflect the main directions of work of the collectives of enterprises to reduce the cost: increasing labor productivity, introducing advanced equipment and technology, better use of equipment, cheaper procurement and better use of labor items, reduction of administrative and managerial and other overhead costs, reduction of rejects and elimination of unproductive costs and losses ... Savings resulting in the actual cost reduction are calculated using the following composition (typical list) of factors:

Raising the technical level of production. This is the introduction of new, progressive technology, mechanization and automation of production processes; improving the use and application of new types of raw materials and materials; design change and technical characteristics products; other factors that increase the technical level of production.

For this group, the standard analysis of the impact on the cost of scientific and technological achievements and advanced experience. For each event, an economic effect is calculated, which is expressed in reducing production costs. Savings from the implementation of measures are determined by comparing the cost per unit of production before and after the implementation of measures and multiplying the resulting difference by the volume of production in the planned year:

E \u003d (SS - CH) * AN,

where E is the saving of direct current costs

CC - direct current costs per unit of production before the implementation of the event,

СН - direct current costs after the implementation of the measure,

AN - the volume of products in natural units from the beginning of the implementation of the event to the end of the planned year.

At the same time, the transitional savings on those measures that were carried out in the previous year should be taken into account. It can be defined as the difference between the estimated annual savings and its part taken into account in the planned calculations of the previous year. For activities that are planned for a number of years, the savings are calculated based on the amount of work performed with the help of new technology, only in the reporting year, without taking into account the scale of implementation before the beginning of this year.

Cost reduction can occur when creating automated systems management, use of computers, improvement and modernization of existing equipment and technology. Costs are also reduced as a result of the integrated use of raw materials, the use of economical substitutes, and the full use of waste in production. A large reserve contains in itself the improvement of products, a decrease in its material consumption and labor intensity, a decrease in the weight of machines and equipment, a decrease in overall dimensions, etc.

At the stage of express reduction, a decision is made to immediately stop financing those items of expenses that the management considers unacceptable given the current financial position of the enterprise. The following sequence of actions is possible:

Conducting the most detailed inventory of the company's expenses (performed by employees of the financial and economic department).

Determination of the category of each item of expenditure and analysis of the consequences of avoiding unnecessary spending, solutions should be developed at a collective meeting with the participation of heads of all key departments. (The four main cost categories are presented in Table 1.)

Complete cessation of financing of the fourth category of expenses, if the goal is to reduce costs. In critical financial condition, it is necessary to stop or sharply limit spending on the third category. In certain cases, it is possible to limit the costs of the first and second categories, although in this case one should remember the proverb: "The miser pays twice."

Tab. 1 Classification of costs by priority:

	description
High priority	Articles that, upon termination of funding, there is a threat of interruption of operations	Payment for raw materials and materials for production. Remuneration for basic workers
Priority	Articles that, when funding is cut off, impair the normal conduct of business	Payment for mobile communications for key employees. Advertising payment
Permissible		Payment for sanatorium treatment of employees. Payment for educational seminars for employees
Unnecessary	Items for which termination of funding will not have a significant impact on the conduct of business	Payment for managers' rest

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It is quite logical that in conditions of economic instability, companies want to "stay afloat", for which they use various methods of cost reduction. This question does not tolerate hasty decisions and an amateurish approach. Therefore, a lot depends on what methods are used in the enterprise, and what you want to save on.

How to start reducing costs in any business

Start by classifying the costs of the business into the following categories:

Efficiency.

The costs associated with the manufacture of products that will subsequently be sold are considered effective. All types of losses belong to ineffective costs: damage, marriage, theft, idle time and others. We must try to keep ineffective costs to a minimum.

Relevance.

The manager must control the dependence of planning on the decisions he makes. Relevant costs are those that depend on management decisions.

If the CEO is no longer able to influence the costs by his decision, then they are classified as irrelevant costs (for example, costs that have occurred in the past period, which he can no longer influence).

Special attention should be paid to management alternative coststhat are categorized as relevant.

Persistence.

Depending on the level of production, there are fixed, variable and mixed costs. One of the main conditions under which it is possible to control fixed costs is their optimization, for which, in turn, it is necessary to share production costs.

To do this, it is important to know that variable costs do not affect constant production volumes and are directly proportional to the production level, while mixed costs include both variable and fixed costs.

Impact on the cost.

Direct and indirect costs are possible in this category. If costs relate to a specific type of service or product, then they are considered direct (for example, the cost of purchasing materials, paying salaries to employees of production units).

The rest of the costs that are not directly related to a specific product are called indirect (for example, costs associated with the implementation of management and maintenance of the management apparatus). If the enterprise produces only one product, then all its costs incurred in connection with the manufacture and sale are considered direct.

You must now identify the costs to be adjusted and plan for reducing them using specific cost reduction techniques.

After analyzing the work of many enterprises, we came to the conclusion that, as a rule, the costs of production, personnel, quality and advertising are reduced.

Methods to reduce production costs

Method # 1. Reduced production costs

Warehouse logistics

Quite often, it is in the warehouse that there are reserves that can be used to reduce production costs. For example, the quality control of raw materials is often carried out using outdated (in every sense) equipment. This leads to the fact that the received raw material does not meet the technological requirements.

In this case, disruption of the production process is inevitable, since both the volumes of raw materials used and energy costs increase. By upgrading your equipment, you will not only reduce production costs, but also get the opportunity to work more effectively with suppliers.

It happens that production costs increase due to an insufficient number of warehouse workers. Suppose wagons with raw materials arrived, which must be unloaded at a strictly allotted time in order to fit, they were simply not weighed.

And, as a result, another check shows that the underweight of raw materials is almost 10%, of course, the supplier is to blame for this. Conclusion: the enterprise will spend less on the wages of warehouse workers than it will lose on the underweight of raw materials.

It happens that raw materials are stored in improper conditions (in the open air, etc.). This is fraught with the fact that it loses its properties, and the violation of technology can no longer be avoided. Not only the volume of consumed raw materials is increasing, but also other resources, in particular, electricity. In addition, it is possible that such a violation will negatively affect the quality of the product.

Transport logistics

Cost reduction techniques in the enterprise include working to improve vehicle utilization. Often, movement, both within the enterprise and outside it (supply of raw materials or finished goods), is very unsatisfactory.

For example, the company has established work with customers, setting a minimum sales volume, but did not consider the issue of the volume of supplies, although this greatly affects the revenue from the entire order.

The difficulties associated with inefficient movement of raw materials relate to internal logistics. For example, repeated unloading and transportation of raw materials: unloaded - conducted incoming control - loaded - transported - unloaded - prepared for production - loaded - transported to the workshop.

Quite a long chain, isn't it? The result of such manipulations is the company's costs incurred as a result of repeated loading and transportation.

Many companies used seemingly dubious methods to reduce transportation costs. For example, at one enterprise, drivers quietly drove to lunch in work machines. No one even thought that this was an expensive pleasure (transport, as a rule, freight), of course, transport costs were huge.

The management solved this problem by purchasing a minibus, on which they began to take employees to lunch. Bottom line: transportation costs have dropped significantly.

Purchasing activities

It was not possible to automate the activities related to procurement, despite the fact that the procedure for holding tenders is carried out at a fairly high level. Corruption cannot be blamed only for this; often the problem lies in the wrong organization of the process.

It is possible that you will be able to apply some methods of reducing costs if you reconsider your approach to procurement. What can be corrected? For example, the following:

Elimination of excessive formalization.

Sometimes well-established procurement control does not give the desired result. This is because the job of the entire purchasing department is to collect data and prepare documentation. Although, employees of the department should be looking for "profitable" suppliers and the conclusion of contracts.

Serious companies arrange tender meetings when they have more than 15 proposals. Naturally, procurement staff spend a lot of time analyzing proposals and preparing the necessary documents. But the detailed development of all purchases requires a lot of time, and it is often not enough.

Not all purchases can be analyzed in detail.

The main thing is to establish priority suppliers, since they are the ones who are able to provide the bulk of raw materials or materials on mutually beneficial terms. Finding a supplier who will become a “fallback” will save the company from risks.

By arranging a tender, you can identify profitable suppliers and discuss the terms of cooperation with them, as well as decide who is better for the company not to contact with whom.

Increasing the level of interaction between the purchasing department and the production and technical department.

An established tandem "procurement - production" can significantly reduce costs: apply certain methods of reducing costs, make specific proposals for changes in production indicators and requirements for raw materials.

These proposals can be applied when drawing up a work plan for the enterprise, when choosing suppliers. Also, mutual coordination of the actions of these services will help to choose a supplier whose products most successfully combine the requirements of the company to price and quality.

Independent assessment of the existing conditions of cooperation with suppliers and the search for new supply channels.

An independent company can help analyze the market situation and find potential suppliers. At the first stages, in order to prepare the most complete list of new potential suppliers and to identify the offered prices and terms of delivery, an open source analysis is carried out.

Based on the results of the analysis, the company's management will be able to expand the scope of the tender campaign. An independent assessment, for example, can show that there are firms from which similar material can be purchased much cheaper than previously.

Production

Considering that many companies are reducing the number of investment projects (or abandoning them altogether), then we can recommend cost-cutting methods that help focus on areas that can reduce production costs. For instance,

Lean manufacturing method.

Provide detailed explanations regarding this method just pointless. The only thing that I would like to draw attention to is its effectiveness (although it takes a lot of time to get a noticeable result).

The fact that this process takes a long time can be easily explained: it consists in changing the culture of employees during the implementation of production work.

Effective accounting and control of the expenditure of material assets, stocks and industrial waste.

This method provides for cost reduction through the efficient use of all production resources. As a rule, at Russian enterprises almost no waste accounting is kept, and, of course, their use is not monitored.

Although sometimes the cost of waste can be much higher than the cost of the product itself, and if you recycle it a little, the waste will turn into a popular product.

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Method # 2. Reduced management costs

Management costs are generally fixed. Moreover, most of them are direct costs (bonuses and other payments to employees). Many cost reduction methods involve revising precisely these items of expenditure, since they are a key factor affecting management costs.

Reducing costs without cutting staff

For most companies, lowering costs without reducing the number of employees is the ideal way to optimize costs, as it helps to build team building, prevent staff drain, and enhance corporate culture. But, unfortunately, the effectiveness of this approach is short-term.

Typically, staff reductions have the following goals:

reduce administrative, transport and travel expenses, as well as the cost of renting premises;
cut salary and health insurance costs;
revise the structure of the working day.

Organizational structure adjustment

The organizational structure of many companies in Russia is far from perfect, so the use of this tool for staff reduction is sometimes simply necessary. Conventionally, the modern organizational structure can be divided into two levels, located at the top ("flat structure") and below ("narrow structure").

The essence of the "flat structure" is the subordination of a large number of employees to the CEO (as a rule, it is 7-10 people, and sometimes their number reaches 15).

If up to three bosses are subordinate to the management, then this is a "narrow structure". Such an organization can lead to problems between functional departments (for example, between project managers and bosses).

In order for a company to function fully during a crisis, it needs a “flat structure” from below. Cost reduction methods provide three ways to solve this problem:

Expand structural divisions by uniting several departments (you can limit yourself, for example, to two).
To make the intermediate levels of management shorter (for example, introduce a new order of subordination of the heads of departments: remove departments, leaving one representative of the directorate).
Determine the required number of posts and divisions (as an option, no more than nine people can be left in a department, and each department can be represented by three departments, consisting of four departments).

By reducing the levels of management and expanding the structural divisions, you can save a lot of funds that were intended for the maintenance of middle managers. Such an adjustment will hardly affect the functional responsibilities of the remaining bosses, in addition, you will not need to reduce the staff.

For example, a company that runs a large holding company has been able to reduce employee costs by $ 1.5 million a year after expanding business units and reducing intermediate management levels.

Functional optimization

Cost reduction methods provide for several areas of reductions in functions and their reallocation:

Reducing the volume of reporting documents, sources of processed data and the level of detail.

It is not uncommon for managers to process a large number of voluminous and poorly structured reports. If the level of detail is made lower, then the volume of work will also decrease (by 20-30%). This will increase the efficiency of making management decisions.

Redistribution of functions between constants structural units, working groups and collegial management bodies.

We know a company that chose this direction of functional optimization: its management decided to liquidate the division that was engaged in the integration and restructuring of assets.

These responsibilities were assigned to working group, which included representatives of various departments, which allowed the company to significantly reduce its costs.

Distribution of functions between service centers and their outsourcing.

A third party company may, for example, provide administration and IT support services. It is quite profitable today as similar companies offer their services at a reasonable price, trying to expand their customer base.

Methods to reduce the cost of product quality - myth or reality ?!

In fact, quality costs cannot be avoided, but some cost reduction techniques can keep them to an acceptable minimum. There are such costs for quality that no enterprise can do without, and some can be completely eliminated.

The latter include the costs that occur due to the appearance of defects or some defects. If this is not possible, then try to keep defects to a minimum, guided by the principle: fewer defects - less cost.

Costs that can be avoided are:

remnants of materials;
correction or revision of defects;
spending additional working time required to eliminate a defect, delay;
auxiliary checks and additional checks in order to identify defects, the percentage of which is already predetermined;
additional risks related to the fulfillment of the company's obligations (including warranty);
low sales due to inadequacy of customer requirements.

Mandatory costs are funds aimed at maintaining high product quality and a minimum defect rate. These costs are necessary as insurance, even with a low marriage rate.

Typically, mandatory costs are associated with the following activities:

audit and operation of the quality system;
equipment check and maintenance;
evaluation of suppliers;
increasing the level of knowledge of employees on quality issues;
inspection and quality control (to a minimum).

Of course, cost reduction methods involve reducing quality costs, but getting rid of them is simply not realistic.

Small business cost reduction techniques

Not everyone russian companies are representatives of big business, but the issue of cost reduction is periodically raised in each company. Therefore, we want to propose methods to reduce the costs of business activities for companies belonging to the category of "small" and "medium".

Give up the office

Today, remote work (at home) is becoming more and more important. If you are not using an office space for storing goods, meeting with clients or displaying windows, then think: "Why do you need it?" It is possible that you are better off giving up the lease.

This solution to the issue is accompanied by a number of positive aspects:

cost reduction. Small businesses spend a lot of money on utility bills, therefore, by refusing to rent an office, you will significantly reduce costs;
wise use of time. Instead of wasting time commuting to the office, use it for work;
free schedule. You plan your working hours yourself and, with a reasonable approach, you will be busy not only with your functional responsibilities, but you can also devote time to loved ones and your own development.

Not all employers are sure that without their control the subordinate will perform his duties efficiently and solve the tasks assigned to him. Of course, everything here depends on the employee: an effective employee does not need total control.

For a "painless" transition to remote work, it is necessary to carry out a number of measures: prepare step-by-step instructions for subordinates, formulate their goals and objectives. Such employees are paid not for the time spent on work, but for its actual performance.

Enter into negotiations with the landlord

If you still need an office or other space, try to negotiate a lower rent with your landlord.

Of course, such a dialogue does not always end the way the tenant would like, but positive moments are still observed. For example, you can hear each other and enter into normal partnerships.

When renting a room, do not leave unused square meters and, perhaps, you will come to the conclusion that you can get by with a smaller territory (and this, again, will warn against unnecessary costs).

Don't "hold on" to unprofitable clients

Not all clients can become profitable. Sometimes the client takes so much time, effort and money that the resulting amount is not able to cover all costs.

Think: why do you need such a client? Is your cooperation mutually beneficial?

It is more logical to use these funds to attract new customers by offering them interesting loyalty programs, bonuses or additional services.

Sometimes the financial position of the company may be such that it will be necessary to apply certain methods to reduce costs. New negotiations with suppliers is a good way to solve the problem. Of course, first of all, you need to pay attention to those for whom you are a profitable client and with whom you have long and successfully cooperated.

Ask your supplier for a deferred payment or a discount. It is possible that the supplier will not refuse you.

Mutually beneficial cooperation

There are companies that are exploring new options for business cooperation in order to reduce costs.

Co-running different campaigns can be an option. For example, if your firms rent neighboring premises or retail space in the same hypermarket, then you can conduct a joint advertising campaign or split the costs for promoters distributing leaflets on the street.

The ideal option is a combination of businesses with a thematic connection. For example, a wedding dress salon and flower shop, travel agency and travel goods store.

Do not neglect ready-made solutions

It is cheaper for companies that belong to the category of small and medium-sized businesses to use ready-made solutions than to develop something new (of course, if you are not doing design or web development).

Enterprises can use the following off-the-shelf business solutions:

accounting software;
software products (analytical or financial);
website development;
a range of services for the organization and implementation of communication programs, etc.

Besides, modern market services are even offered by the implementation of highly efficient sales systems.

17 methods to reduce personnel costs under the Labor Code

Do not accept "extra" employees.

Some cost reduction techniques are based on basic mathematical knowledge. Therefore, it is not difficult to calculate that the payroll of eight people holding the same positions is less than, for example, ten.

If the existing eight employees are successfully coping with their duties, then why pay more and fill all the vacancies included in the staffing table?

Increase the variable part of the pay.

If the enterprise uses time system wages, then it is practically impossible to apply any methods of reducing the cost of wages, as well as to manage the fund itself. According to article 74 Labor Code, it is possible to change the system and the amount of remuneration only in case of fundamental changes in the technological or organizational working conditions.

If you have a justification for making such changes, then inform the employees about it and after two months implement this program.

If the employee refuses to sign supplementary agreement, which specifies the new payment terms and is ready to leave the company, then you pay him a severance pay equal to his earnings for two weeks.

On the basis of the same article, the employer can transfer the company to a part-time and / or weekly basis for a period not exceeding six months.

Enter the summarized accounting of working hours.

Payments for overtime work does not have to be done monthly. Article 104 of the Labor Code states that such payments can be made at the end of the reporting period. Cost reduction techniques do not rule out this approach if production is not fully utilized or is subject to seasonal changes.

Use a system of short-term co-payments and allowances.

If, within a certain period of time, one of the employees has to perform a larger amount of work, replace an absent employee without release from basic duties, then, according to article 151 of the Labor Code, this is the basis for increasing the amount of remuneration.

Accordingly, wages can be reduced if there are no grounds for additional payment.

Pay bonuses only after the business has achieved certain goals.

For example, employees receive bonuses if the enterprise has fulfilled the production plan and, conversely, if there is no plan, there are no bonuses. Article 135 of the Labor Code regulates the procedure for paying bonuses, and changes to the payment system are made on the basis of Article 74 of the Labor Code.

Reduce the number of employees or cut the staff.

Reduction of staff is regulated by paragraph 2 of article 81 of the Labor Code. It would seem that such cost reduction methods should have an immediate effect, but this is far from the case.

First of all, because the reduction procedure itself must be planned in advance, you must inform your employees about this no later than two months before dismissal and pay them severance pay (2-3 monthly salaries).

Thus, you will “feel” the effectiveness of the method only 4-5 months after you make the decision to reduce the number of employees (layoff).

Revise labor standards and streamline manufacturing processes.

Reducing costs in the enterprise is when fewer workers are involved in the implementation of the production plan, or they are faster to cope with the tasks.

When applying this method, you must be guided by Articles 160 and 74 of the Labor Code, which states that you need to notify employees of your plans to revise labor standards two months in advance and conclude additional labor agreements with them.

Enter into fixed-term employment contracts.

The grounds for using this method are set out in Article 59 of the Labor Code, where restrictions on its use are also established.

Use outstaffing (agency labor).

The rules for applying this method are set out in Chapter 53.1 of the Labor Code. Before using it, you need to weigh the pros and cons and evaluate your benefits.

On the one hand, outstaffing is a good method to reduce management costs: you do not need to select employees and take care of the timely calculation and payment of salaries, etc.

But, on the other hand, by paying for the services of the company that provided employees, you still spend money on personnel.

Take advantage of outsourcing.

Cost reduction methods involve purchasing services by entering into an agreement with cleaning companies. For example, purchasing the "Clean Office" service, you do not need to hire a cleaning lady.

It is impossible to say right away whether it will be profitable for your company or not - everything must be calculated. Although, in the budget, personnel costs will definitely decrease.

Enter into civil law contracts.

It is very good if the performance of the work does not go beyond the scope of the civil contract. In this case, you are not considered an employer, and your relationship with an employee is not subject to the Labor Code.

However, before starting to use such methods of reducing costs, it is necessary to carefully study article 15 of the Labor Code, which sets out the grounds for entering into civil law relations.

If such an agreement turns out to be illegal, then all your savings will come to naught.

Declare the simple.

If the downtime occurred due to the fault of the employer, then, according to article 157 of the Labor Code, the employee receives a salary, the amount of which is not lower than 2/3 of his average monthly earnings.

If neither the employer nor the employee is to blame for the downtime, then the wages are calculated in proportion to the downtime in the amount of not less than 2/3 of the salary (tariff rate).

If the employee is to blame for the idle time, then his salary is not charged.

Conduct employee certification.

If the employee is inconsistent with the position or duties performed, in accordance with Article 81 of the Labor Code, he may be dismissed. The confirmation of his qualifications are the results of certification.

This technique cannot be classified as one of the most effective methods of cost reduction, as it is very laborious and selective.

Eliminate social benefits and compensation.

We mean full or partial cancellation of payments provided for by the Labor Code of the Russian Federation.

You, as an employer, have the right to revise payments based on certain regulations, for example, payment for travel, meals, accommodation or medical services, provision of material assistance.

If your collective or labor agreement contains obligations to provide additional payments, then these documents need to be adjusted.

You have no right to change the collective agreement on your own. But, according to Article 74 of the Labor Code, it is possible to unilaterally amend labor contract, for example, to cancel the payment of travel for an employee whose nature of work has been changed (he stopped traveling to resolve production issues).

Adjust staff turnover.

There are many factors that contribute to high level staff turnover: inappropriate working conditions, heavy work schedule or not very convenient schedule, wage system or salary, etc.

The employer is able to take legal measures to regulate the degree of influence of these factors on employee turnover, thus introducing methods to reduce costs (moreover, it is difficult to give any recommendations on this issue, everything is very individual here).

Reduce employee training costs.

The hardest part is to manage the costs associated with employee training.

When planning a budget for personnel costs, you can go in several ways, for example:

limit the cost of training one employee;
identify priority learning objectives;
conduct training yourself;
invite specialists to conduct trainings, etc.

Staff training is a good reason to be creative and creative. This topic is so voluminous that it requires a separate publication.

Provide vacations without pay, establish a part-time / weekly schedule.

According to article 128 of the Labor Code, an employee must write an application to grant unpaid leave.

To introduce a part-time regime, it will be necessary, in accordance with article 93 of the Labor Code, to conclude an additional labor agreement.

Naturally, the desires of the employer and the employee do not always coincide. Therefore, it is necessary to enter into negotiations with employees, during which they acquaint them with what can happen if more stringent methods of reducing personnel costs are applied. Usually, decisions made in this way are acceptable to both parties.

Summing up, it is worth noting that the choice of the method depends only on you, but before making a decision, it is advisable to consult with experienced financiers and lawyers.

Methods to Reduce Advertising and Marketing Costs

If you gave at least one yes, then we can help you optimize your marketing budget by suggesting the following cost reduction methods.

Do not interact with a faceless crowd called "target audience"

The current level of technology development makes it possible to find out about a potential buyer much more than the banal: “woman; age: 35-45 years old; the average income is 100 thousand rubles. "

Let's say you have several thousand customers - this is not a reason to go to all target audience... A potential buyer is very different from the rest: he is interested in purchasing your product or its equivalent. He needs it!

You must find out: why does he need him, when this need arose, where is he trying to find him, who asks for advice, why he has not bought it yet, and what funds will be used to make the purchase.

First, when you answer the questions about the customer, you can identify them. information sources... They may not match the Mass Media you use to communicate to your target audience.

Post information on communication channels demanded by your potential clients. Tell them the information included in the purchase context.

Turning to a person who is already faced with the task of buying this product or not, you will offer him a ready-made solution. It is enough for him to listen to the information one, maximum, two times in order to remember or write down the information received.

SEO budget and arms race costs are similar

Search engines operate on algorithms that rank search results according to the degree to which they satisfy the user's request. Moreover, SEO-optimizers regularly work to "outwit" the search engine, and they regularly update the algorithms. It turns out to be a vicious circle.

It happens that search engines "take over", but after a while SEO-craftsmen bypass them again. If your resource entered the TOP only thanks to an efficient SEO optimization, then soon it can be shifted to the backyard by more competitive resources.

But there is a way out! Fill in the resource requested by a potential buyer. You can do this, for example, on your blog.

What does cost reduction methods have to do with it?

First, blogging doesn't have to involve expensive professionals. Not all blogs are for the sake of making money. As a rule, people are interested in it. And in your company there will be those who like their work and who would like to talk about what they do (sell or produce).

Secondly, hiring a professional blogger will cost no more than paying for the services of an SEO optimizer. The only thing is, find out how well he understands your product (maybe he just presents information beautifully?).

Thirdly, given that search engines algorithms are regularly updated, SEO optimization must be carried out constantly, which entails continuous costs.

If you publish informative materials, then the resource can "work for you" for many years. You can be sure of this when you find useful information in "old" articles (published several years ago).

Memory stores creative ads

Consider some of the memorable slogans:

"Let's change the world for the better" ... Who and how?
"Sometimes chewing is better than talking.". Of course, gum! Which one?
"Impossible is possible" ... Precisely heard somewhere? About sport! Or Bilan's song?
"More than fuel" ... It seems to be about gasoline. Or not about him?

We took slogans that have received worldwide recognition. They were composed by the best creatives.

A similar picture is observed with regard to special effects. Today, sneakers can take their wearer into space. Effectively - yes, efficiently - hardly. Viewers know full well that this is unrealistic, so don't expect everyone to rush to buy them.

What does cost reduction methods have to do with it?

For the sake of creativity, give up creativity. Having received answers to questions about customers, you can understand not only "who", but also "why", "when" buys your products. This information should be placed in the advertising message. Don't turn means into ends, but use them to achieve those ends.

Does participation in advertising of movie, sports or business stars help to remember it? Sure! Does this affect the buyer's choice? Hardly!

Choosing a reliable bank, which people trust "with their hard-earned money", they will look for sources that inspire confidence. Who will they believe? An ordinary bank employee who will be their good acquaintance or relative (albeit distant) or a Hollywood star?

It is unlikely that this celebrity keeps money in one of the banks in Russia. This is not even mentioned in the advertisement. Where does such confidence in its reliability come from?

What methods of cost reduction are appropriate here?

For example, a famous athlete may appear in a commercial for a sneaker if he personally tested it. In other cases, it is better to conduct an analysis of people familiar with your product, so that everyone understands: “why” he bought it and “how” it solved his problems. Such information will be more useful than any "famous person".

We have provided you with generalized cost reduction methods. Don't forget that every business is as different as its owner. Any company faces specific tasks that are unique to it.

Today, all business representatives are in a difficult position. Most likely, those who will be able to continue successful activities with minimal production and marketing costs will be able to "resist" and "flourish".

Inform the consumer about the merits of your product without investing a lot in it. This approach can be called effective!

Optimization of income and expenses in the organization. Reducing Enterprise Costs: Best Practices. Three ways to optimize costs

What's the first thing to do?

Key costs that can be reduced

Production cost

Service

Get rid of excess

Reduction of staff and wages

How to cut costs correctly?

Related Posts

How to reduce costs in the enterprise

Ways to optimize and reduce costs in the enterprise

Three basic principles of work to avoid unnecessary waste

Planning

Discipline

Three ways to optimize costs

Express reduction

Reduce enterprise costs quickly

Systematic reduction

Ten rules of cost control

Reducing enterprise costs

What does the company spend money on?

Salary

Purchase of raw materials

Transportation of materials and finished products

Maintaining large clients

Rental and maintenance of premises

Communal payments

Equipment maintenance and repair

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Do not interact with a faceless crowd called "target audience"

SEO budget and arms race costs are similar

Memory stores creative ads

Does participation in advertising of movie, sports or business stars help to remember it? Sure! Does this affect the buyer's choice? Hardly!

The last

You need to know