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Cost Reduction

Cost reduction is the process used by companies to reduce their costs and increase their profits. Depending on a company’s service or product, the strategies can vary. Every decision in the company process affects cost. Companies typically works without focusing too much on cost. Cost becomes more important when competition increases and price of service or product becomes a differentiate in the market. Mainly the process of looking for, finding and removing unwanted expenses form a business  to increase profits without having any negative impact on quality of product or service. there are various Technics, tactics and strategies for cost reduction.

Tools and Technics we use

  • Budgetary control,
  • Standard costing,
  • Standardisation of products and tools and equipment’s,
  • Simplification and variety reduction,
  • Improvement in design,
  • Material control,
  • Labour control,
  • Overhead control,
  • Production planning and control,

  • Automation,
  • Operation research,
  • Market research,
  • Planning and control of finance,
  • Value analysis,
  • Quality measurement and research,
  • Cost benefit analysis.
  • Contribution Analysis
  • PERT
  • Job Evaluation and Merit Rating.


  1. Cost reduction increases profits.
  2. Cost reduction can provide more money for labour welfare thus it improves men management  relationships.
  3. It make goods and service available to consumer at cheaper rates.
  4. It can be helpful to meeting competitions effectively.
  5. Cost reduction lays emphasis on a continuous search for improvement which will improve an image of a company for long term benefit.  and many more..

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