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Half cost strategies: ambitious strategies which aim to reduce the costs of specific production processes or value adding stages to 1/N of the previous cost. [7] Examples specifically focussed on the use of suppliers and the costs of goods and services supplied include: Supplier consolidation: see examples in the aerospace manufacturing industry
Kaizen costing is a cost reduction system used a product's design has been completed and it is in production. [1] Business professor Yasuhiro Monden [2] defines kaizen costing as . The maintenance of present cost levels for products currently being manufactured via systematic efforts to achieve the desired cost level. [citation needed]
Design-to-Cost (DTC), as part of cost management techniques, describes a systematic approach to controlling the costs of product development and manufacturing.The basic idea is that costs are designed "into the product", even from the earliest concept decisions on and are difficult to remove later.
Companies are focused on cost reduction in case of a recession–but they should be preparing for the recovery that will likely happen Steve Gallucci, Ira Kalish October 30, 2023 at 6:42 AM
Target costing is defined as "a disciplined process for determining and achieving a full-stream cost at which a proposed product with specified functionality, performance, and quality must be produced in order to generate the desired profitability at the product’s anticipated selling price over a specified period of time in the future."
As manufacturing companies evolve and automate more and more stages of the processes, these processes tend to become cheaper. DFM is usually used to reduce these costs. [1] For example, if a process may be done automatically by machines (i.e. SMT component placement and soldering), such process is likely to be cheaper than doing so by hand.
Labor cost reduction 30% 15% 50% Space reduction 50% 30% 33% 40% WIP stock reduction 22 days to 1 day Production increase 100% Quality improvement 30% scrap, 79% rework 80% scrap 30% scrap & rework Throughput time reduction 50% 17 days to 30 hours Standard hours reduction 50% No. of shipments increase 20%
Labor costs are direct costs, that is, they can be identified among the total cost and assigned to a certain cost objective. [1] Labor costs are defined by categories (e.g. service labor or manufacturing labor), the attribution of a labor rate for each category, and a certain number of labor hours. [1]