Cost Reduction
Take cost out without taking the business with it. Find the large, addressable lines and leave the ones that carry revenue.
No practice cases of this type yet.
Costs
- Fixed
- Rent, land and buildings
- Machinery and equipment
- Base salaries
- Interest, insurance, depreciation
- Variable
- Raw materials
- Processing and packaging
- Transport and storage
- Commissions and after-sales
Costs
Fixed
Rent, land and buildings
Machinery and equipment
Base salaries
Interest, insurance, depreciation
Variable
Raw materials
Processing and packaging
Transport and storage
Commissions and after-sales
Watch out: For each cost that grew, ask whether we pay more per unit or use more units; the fixes differ.
On a case
A private hospital's cost per bed-day rose 18% in a year.
Cost per bed-day
- Fixed
- Doctor and nurse salaries
- Building and equipment
- Variable
- Medicines and consumables
- Food and laundry
Cost per bed-day
Fixed
Doctor and nurse salaries
Building and equipment
Variable
Medicines and consumables
Food and laundry