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TOPIC : Managing cost during recession - an eye opener
Indian industries are affected due to Global recession.
The business environment is changed. Companies today face the challenge of increasing competition, rising cost. Demand instability and input price instability is raising concern to the industries. To remain in the business, organizations must improve their own business practices and procedures.
In this article, I would like to emphasize few important tools useful for organizations.
Inventory Management:
The effects of excess inventory is always blocking the company money. Optimum inventory helps your company to use the working capital elsewhere. On line schedules to suppliers. Use correct kanban size. Update BOM on a regular basis, communicate suppliers instantly. Vendor managed inventory only will help to reduce stock and increase inventory index. Vendors to maintain ownership of their material until final point of assembly. Two approaches have had a major impact on inventory management: Material Requirements Planning (MRP) or Enterprise Resource Planning (ERP) and Just-In-Time (JIT and Kanban).Industries using these techniques are benefited.
Cost Reduction:
The cost reduction program within a company is very important. Companies that are losing money need to increase profits and should need to cut expenses. The cost reduction exercise may vary from industry to industry but the methodology of cost reduction does not vary. Some of the known techniques are Value Engineering, direct cost control, indirect cost control, waste elimination etc.
All the above may be known to many but each and every technique needs full understanding before put in to place. The above information will be useful as an eye opener.
L.N.Raghavan
Consultant
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TRADE INDIA MAIL
