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6/3/2012 7:52:36 PM EST
|Why snip to avoid spending a good strategy
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Human psychology abuses end and maximizes the feeling on both the positive and the negative side. In a situation of economic prosperity is more likely to abound the waste that in a situation of crisis. Logical. But the point is that as the waste the same amount, is not perceived as even when the situation is when it's boom or crisis. Given the situation seem a slip boom, before the crisis an insurmountable barrier.
The company is perceived abuses of the perpetrators and their situation is a double burden for this perception. What happens? vision is maximized for both outbreaks.
Keep North in a situation of great responsibility and unfavourable situations seem difficult but you should understand that reducing costs does not always solve problems. Rather it creates.
It is common to see situations of economic boom in business templates grow, the machinery is renewed, the office is large, the policies were expanded, reabsorb of credit, etc. Then, if conditions worsen, decisions must be taken and with time constraints. Lay-offs, material returns, blackberries ... and the best is done something even worse, reduce the level of quality, its high cost, products or services offered. A full-fledged business suicide.
Trim to have to cut is not the most logical and consistent, rather it is an abuse of responsibility and a nonsense result of stress of the moment. What should be raised instead?
M. Porter defined the causal chains of companies and activities that add value for customers by transforming raw materials into products or services. So if what you want is to reduce the cost of activity is to define what these value chains and eliminate processes that do not contribute to an end and improve so. This is the analysis of the value chain something called Activity Based Management (ABM).
The ABM system is the answer to the following questions:
How much should cost a product or a business process?
If you reduce the price of a product to increase sales volume, what the impact on unit margins and profits?
What are the activities that add no value but add cost?
Where in the company can reduce expenses?
Are they profitable distribution channels?
If you delete a product or client that are not profitable, what savings would be?
If the time has come to be cut with a good end, improve the business.
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