Cost Reduction And Cost Avoidance Sample College Essay

Cost reduction

Generally defined as the act of cutting costs to improve profitability, cost reduction should not be mistaken for cost saving and cost control. Cost saving might only be a temporary solution and could come at the expense of quality. In contrast, cost reduction ensures that the essential characteristics and quality of the product are maintained, and it should focus on achieving permanent and genuine savings in manufacturing, administration, distribution, and selling by eliminating wasteful and unnecessary elements from the product’s design and associated techniques and practices.

In summary, cost reduction is achieved by using improved methods and techniques that maintain the essential characteristics and quality of products. However, this definition does not include cost reduction resulting from government actions or price agreements. The definition of cost reduction is based on three assumptions.

  • There is saving in a cost unit
  • Such saving is of a permanent nature
  • The utility and quality of goods remain unaffected, if not improved

A cost reduction, which is a “hard” cost saving, typically takes the form of a tangible year-over-year reduction in bottom-line costs. This can include direct reductions in capital or operating expenses, such as decreased annual lease payments, lower telecommunications costs, or reduced IT maintenance fees. It can also involve process improvements that result in real and measurable cost reductions, such as increased productivity on the production line or reduced waste through more efficient use of raw materials. Additionally, cost reduction may involve paying lower prices for raw materials procured compared to the previous year.

Cost avoidance

The concept of cost avoidance involves preventing or evading expenses, thereby leading to savings. This occurs when the purchasing organization takes actions to prevent cost escalation. These actions may include negotiating a lower price increase, substituting a higher-priced item with a cheaper alternative as initially requested, or switching to lighter packaging material to offset an increase in transportation costs (as long as the new material is less costly and leads to reduced overall costs).

Whether a cost saving is classified as a reduction or an avoidance, it can also be categorized into “hard” or “soft” savings. A hard cost saving refers to a decrease in the amount of money leaving the organization, either immediately or in the future, depending on whether the saving is achieved through a reduction or an avoidance. Hard cost savings must be quantifiable in budget or operations reports, and they are crucial in gaining management acceptance for cost-saving strategies that consider the total cost of ownership.

A cost avoidance refers to a type of cost saving that is considered “soft” and typically involves intangible factors that may not be immediately evident but still have a significant impact on the overall cost. Examples of cost avoidance include a delayed price increase despite increasing costs in the commodity markets, negotiations resulting in a purchase price lower than the initial quote, inclusion of additional value-added services in a contract without additional charges, long-term contracts with provisions to protect against price changes, and the discovery of a new production process that allows for the use of less expensive materials.

SIX FUNDAMENTAL SOURCES OF COST

  • Raw material collection, processing, and handling costs
  • Design, component, and production costs
  • Inventory, distribution, and overhead administration costs
  • Loading, shipping, and insurance costs
  • Negotiation, requisition, approval, receipt, reconciliation, and payment costs Reconciliation, and collection costs

COST REDUCTION AND AVOIDANCE MEASURES

Both types of cost control, cost containment and profitability, are crucial for a company aiming to achieve and sustain profitability, particularly in a fragile economy.

Contingent workforce management

Organizations are increasingly relying on contingent workers to fulfill important staffing requirements. With the continuous growth of this need, it becomes crucial to effectively manage staffing suppliers and strategically oversee the process while controlling expenses. By establishing comprehensive management programs throughout the organization, consistency, flexibility, and responsiveness can be achieved to drive positive outcomes. The successful implementation of a Contingent program is imperative.

The Workforce Management program needs a technology solution that is built on standardized, efficient, and effective processes. However, achieving true strategic optimization is challenging without a win-win strategy and partnership within the supply chain. A clear understanding of the primary value proposition within a structured program and how organizations can leverage vendor benefits is crucial to achieving supply chain and flexible workforce optimization.

Design for supply

The primary focus is on designing and selecting common components for product families or platforms. This aims to reduce the number of variations in components used to create each brand or product family. It is crucial for marketing to distinguish each product offering to meet the specific needs of different consumer segments. However, differences that are not noticeable to consumers should be kept to a minimum. Supplier management is also an important aspect.

A broad term describing the various acts of identifying, acquiring, and managing the products and/or resources needed to run a business or other organization. These include physical goods as well as information, services, and any other resources needed. Supply management divisions within large corporations can be very large, with budgets in the billions and employing hundreds of workers. The main goals within supply management are to control costs, efficiently allocate resources, and gather information to be used in strategic business decisions. Distribution network re-design.

Supply chain network design involves analyzing and designing the infrastructure of the supply chain network, including production and distribution, to best align with the supply chain strategy. The objective is to optimize both customer service levels and supply chain costs.

Shipment consolidation

Containerization is a cargo shipping method that involves a freight forwarder consolidating multiple consignments to form a complete container load. This arrangement provides enhanced security at reduced shipping rates. Upon reaching the destination port, the consolidated shipment is then broken down into its original individual consignments for delivery to their respective consignees. This shipping method is also known as grouped shipment.

Combine Cargo adheres to all customer requirements stated in the shipping instructions and handles the warehousing, securing, and loading of the cargo into containers. Through consolidation, the cost of transporting smaller volumes of goods is substantially reduced by moving them together. This enables clients to benefit from lower shipment costs and allows for the utilization of multiple modes of transportation.

Companies that use multiple modes of transportation to meet their shipping needs are engaged in multimode transportation. The goal is to minimize costs by utilizing different transport methods and fulfilling requests as efficiently as possible, as delays in cargo delivery can result in significant contractual penalties.

Strategic sourcing

Strategic Sourcing is a procurement strategy that utilizes the collective purchasing power to reduce costs for commonly used goods and services. This approach offers improved pricing, quality, and overall service. The goal of strategic sourcing is to leverage buying power in order to obtain goods and services at lower costs while maintaining high quality and service standards. Brand building involves directly enhancing a brand’s equity through advertising campaigns, as well as indirectly through promotions such as endorsing causes or sponsoring events.

SOFT FUNNY MONEY

Cost avoidance, also known as “soft savings,” is the act of slowing the rate of cost increases or obtaining “value-added” services. It is considered intangible, hence referred to as soft funny money that can be easily manipulated. An example of cost avoidance is resisting or delaying a supplier’s price increase.

Purchasing the product at a price that is lower than the initial quote is considered a saving. In addition, receiving free training or having a long-term contract with price protection provisions are also classified as savings. Another way to save is by introducing a new product or part number which requires a new material purchase. Although the spend is lower in these cases, the savings are classified as avoidance because there is no historical comparison.

LEGITIMATE COST

Purchasing Services utilizes supply chain business strategies to identify and monitor genuine cost savings. They strive to achieve the most economical pricing that considers price, quality, service, delivery, and other important factors for evaluating the overall value of the required products and services that support the organization’s mission. However, Purchasing Services ensures that pursuing cost savings alone does not dictate the choice of a product, supplier, or work method when meeting a need.

Purchasing Services understands the importance of consistently satisfying customer needs and delivering top-notch products and services. When reporting cost savings, our department adheres to established criteria used in the private industry. This ensures that we can clearly identify, measure, and directly attribute the savings to the active participation of one of our purchasing representatives during a transaction, project, or contract negotiations.

The organization’s goal is to generate a substantial return on investment through different methods, including securing new contracts, saving costs on projects, avoiding expenses, recurring savings, and generating revenue. These cost savings are achieved by the deliberate actions of Purchasing Services staff members. A purchase cost saving or avoidance occurs when a product or service is acquired at a lower price compared to what was previously paid for the same item or a similar one.

CONCLUSION

The primary objective of any business is to generate economic value for its customers, as without this, there would be no sales or trades. It is essential to consider this factor when assessing supply chains for potential cost savings. When the same level of customer satisfaction can be attained at a reduced expense, it contributes to the creation of extra economic value. This value can manifest in lower prices for customers, higher profits for sellers, or a blend of advantages for both parties involved. To enhance economic value, supply chain management concentrates on minimizing costs within the supply chain. A productive approach to accomplish this objective is:

  • Identify cost drivers
  • Identify total cost categories
  • Develop cost reduction activities/programs, e.g. continuous improvement
  • Measure costs over time.

Essay Slumdog Millionaire Analysis

The film Slumdog Millionaire, showcased in previous class lessons, revolves around Jamal Malik and his life story. It depicts him as an orphan from Mumbai’s slums who participates in the Indian version of “Who Wants to be a Millionaire?”. However, his exceptional knowledge leads to accusations of cheating since it is hard for the police to believe that a boy from the slums could excel in such a competition. In order to prove his innocence and showcase his intelligence, Jamal reflects on memories from his childhood. Each question he faces triggers flashbacks that provide insight into his past experiences. The movie seamlessly transitions between these flashback scenes, enhancing their significance by allowing viewers to delve into Jamal’s early life before returning to the present timeline.

Slumdog Millionaire takes audiences on Jamal Malik’s life journey, starting with his childhood and progressing into adulthood. It also sheds light on the harsh realities faced by children in India, particularly those like Jamal and his brother Salim who lack family support. These children often become victims of kidnappings and are coerced into participating in illicit activities involving drugs and alcohol. Such jobs are both common for children and extremely perilous due to the prevalent violence associated with them.

Although I couldn’t find any movies or books exactly like Slumdog Millionaire, I did come across some that share similarities. When I watched Slumdog Millionaire, it reminded me of a cherished book from my past titled The Kite Runner, which has also been made into a film. The Kite Runner tells the story of two childhood friends who are separated by an ongoing war in their homeland and lose touch with each other. However, one of them eventually returns home to search for the other. What leads me to draw comparisons between these two films is their shared theme of characters embarking on journeys to reunite with loved ones. Just as Jamal sought Latika, Amir went back to find Hassan in The Kite Runner. Additionally, both films left a deep impact on me as they were thought-provoking and profound unlike many superficial movies available today. They convey meaningful messages filled with significant depth.

The main theme conveyed in the movie Slumdog Millionaire is that love can drive individuals to accomplish extraordinary feats. The protagonist, Jamal, participates in the game show “Who Wants to be a Millionaire” solely because he wants to reconnect with his beloved, Latika. Although he is unable to directly communicate or meet with her, he decides to appear on the show so that she can see him from wherever she may be. Another key message in the film is that intelligence exists among those living in impoverished slums, despite society underestimating their knowledge due to their living conditions. People often possess a negative tendency to prejudge others based on appearance or origin. Instead of offering support or assistance to the less fortunate, we either look down upon them or purposely ignore their struggles. The film’s title, which merges two opposing terms, represents the possibility that some individuals from impoverished backgrounds have the potential to become wealthy. It teaches us not to judge individuals based on outer appearances or past experiences because they might surprise us if given an opportunity. Lastly, the movie emphasizes the importance of maintaining hope and patience in difficult times.

Jamal’s unwavering belief led him to relentlessly search for Latika, as he was convinced that their reunion was inevitable. In contrast to his brother, Jamal exhibited a composed and rational demeanor, making him a significant character in the film. Equally important, Latika was an enchanting individual who remained deeply in love with Jamal ever since their childhood encounter. While their paths diverged during a train journey, their love endured despite the physical separation. Eventually, fate brought them together again, and they were determined to hold on to each other despite facing drastically different circumstances. The credibility of both characters in Slumdog Millionaire is rooted in their profound love, which often drives individuals to act selflessly without consideration for the consequences. Love has the power to render one blind to everything but the beloved.

Sometimes, it’s comforting to believe in the existence of a higher power or some form of overseeing presence. Personally, I don’t perceive life and love as mere coincidences. Despite not being religious, I have faith in a grander scheme for each individual. We all possess a predestined journey, yet we hold the power to determine its course. If we make unwise choices, we must embrace the ensuing consequences. While I believe in fate, I acknowledge that waiting passively for events is insufficient – often, I must seize control and become my own savior.

Poe And Whitman Figurative Language

1. Edgar Allan Poe expresses a negative view of science through his use of figurative language, specifically by personifying science as a predator. He appears to harbor anger towards science, questioning its worth and loveability.

2. Poe’s speaker claims that science has only brought negative consequences, preying on him and overly analyzing the simplicity of the world around him. This suggests that Poe sees a clash between his romanticism and the scientific approach. Furthermore, Poe seems displeased with science’s tendency to try and uncover hidden meaning in everything.

3. According to Poe’s speaker, science has greatly impacted the world by scrutinizing every aspect of it. This implies that science has both positive and negative effects on the world.

4. This piece does not seem like an ode as it takes on a critical rather than celebratory tone towards science. The words “peering” and “alterest all things” stand out, suggesting that science behaves like a spy trying to uncover hidden truths in everything.

Whitman

1. The poem’s syntax creates a continuous narrative, aimed at telling a chronological story, which is the author’s intention. Whitman is essentially narrating a story.

2. The scientific data presentation nonchalantly affects the speaker, who shows no interest in “charts and diagrams” or sitting through the astronomer’s lecture, as the speaker feels sick and tired.

3. The use of sitting, rising, and gliding participles creates a chronological effect that evokes euphoric imagery. Initially sitting down, then rising and gliding away, the speaker becomes engrossed in solitude among the stars.

4. The author suggests that science and nature have differing characteristics. Science is based on a sequential and data-driven approach, whereas nature lacks explanation or logic but possesses unparalleled beauty.

5. Poe and Whitman share similar viewpoints, although Poe expresses a slightly more negative attitude towards science. Whitman, on the other hand, appears to hold no preconceived notions about science and instead appreciates the beauty of nature over lectures, facts, and charts.

6. If Whitman were to consider the opinions of Huxley or Eiseley, he would likely find them irrelevant. However, if forced to choose, Eiseley might be seen as more of a “kindred spirit” due to their shared perspective on the overall impact of science on the world rather than solely focusing on their own lives, in contrast to Poe and Huxley.

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