Cost Cutting Factor... - CiteHR
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Dear Sir,
Recently our company analyze past year cost for company and they observed that the cost is so higher than turn over. So they decided to cut the cost from all segment including salary of all employee , daily cost for general need and all the things. They reduced the salary of employee and also terminate some of the employee from organisation. Can anyone tell me that how can we cut the cost instead of terminating or reducing salary of any employees from organisation ???
Please do need full..

Dear ,

You have not given adequate information about your company. What is your finished product or service? How have you measured your business costs?

Cutting down salaries of the employees is poor way of cost cutting. There are whole lot of business costs. You need to concentrate on these costs. For average manufacturing company, following costs are important:

a) Cost of raw material in stores

b) Cost of WIP inventory

c) Cost of the finished products in the warehouse

d) Distribution cost to distribute the finished goods to the wholesalers and retailers

e) Inventory carrying cost at the retail stores

f) Rejection cost at factory

g) Rejection cost for the material rejected by wholesalers or retailers

h) Cost of stock out

i) Capacity costs

j) Set up costs

The real business performance depends on ability to manage these costs effectively. Rest all is humbug. You need to assign the above costs to some HOD. However, mere assignment cost is not everything. Your company needs to know how to measure the above costs scientifically. However, this is much easier said than done. For this, you need to hire services of some consultant.

If you wish to identify the costs associated with your business then you can hire my services. For more information, call me on my mobile.

Thanks,

Dinesh V Divekar


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