Methods for reducing costs in a company and enterprise without small sacrifices. Reducing enterprise costs

State educational institution

Higher professional education

"State University of Management"

Department of Political Economy

The main ways to reduce costs in an enterprise

Student creative work

IISU information management 1

Alexandrova Alexandra

I checked

Dan. Rybina Marina Nikolaevna

Moscow

1. The main ways to reduce costs in an enterprise

Introduction

1.1 Enterprise costs.

1.1.2 Approaches to cost estimation

1.2 Ways to reduce costs

1.2.1 Cost reduction program

1.2.2 Introduction of information technologies and their impact on costs.

Conclusion

2. List of references used

3. Questions for self-control

5. Glossary

6. Answers to the test

1. ABOUT The main ways to reduce costs in an enterprise .

Introduction

The purposes of this creative work is the study of production costs 1 and ways to reduce them. Production costs are now a rather serious and pressing problem today, because in market conditions the center of economic activity moves to the main element of the entire economy - the enterprise 2. It is at this level that products needed by society are created and necessary services are provided. The most qualified personnel are concentrated at the enterprise. Here the issues of economical use of resources 3 and the use of high-performance equipment and technology are resolved. The enterprise strives to reduce production and sales costs to a minimum.

Costs reflect how much and what resources were used by the firm. For example, the elements of costs for the production of products (works, services) are raw materials, wages, etc. The total amount of costs associated with the production and sale of products (works, services) is called cost.

The cost of 4 products (works, services) is one of the important general indicators of the activity of a company (enterprise), reflecting the efficiency of resource use; implementation results new technology and advanced technology; improvement of labor organization, production and management.

The first chapter examines the very nature of costs and their determination; this issue is especially important in the transition phase Russian economy, since it has a decisive effect on Russian entrepreneurship. Every entrepreneur should be able to calculate their production costs well. If he does not know how to count his expenses, then there is a very high probability that they will be more than income, i.e. the company will suffer losses. And if a company falls into a financial crisis, it can be very difficult to get out of it. Before starting any new business, it is necessary to carry out as accurate calculations as possible, predict and plan your future activities, and study how external factors, which can affect the position of the company, such as demand, and internal ones, such as production costs.

And for an economist, knowledge of production costs is also important from the point of view that they, as we will see later, are one of the most important factors influencing the supply of products on the market.

There are various concepts of production costs, which from different points of view characterize the company’s costs for manufacturing products.

Any company strives to obtain maximum profit at minimum total costs. Naturally, the minimum amount of total costs varies depending on the volume of production. However, the components of total costs react differently to changes in production volume. This applies primarily to the costs of paying service personnel and paying production workers.

Also, the purpose of the work is to study the impact of production costs on profit. This question is also a concept of economic rationalism.

The essence of the concept of economic rationalism lies in the assumption that economic entities determine, on the one hand, the benefits from their actions, and on the other hand, the costs necessary to achieve these benefits, means and their comparison in order to maximize benefits for given costs of resources used (or minimize costs required to obtain these benefits). Such a comparison of benefits and costs when making economic decisions allows us to determine the most optimal actions of a given economic entity under given conditions. In this case, benefits are the benefits received by a given economic entity, and costs are the benefits that a given economic entity is deprived of during a given action. The rationality of the behavior of economic entities will consist in maximizing income from economic activity.

1.1 Enterprise costs.

Each enterprise, firm, before starting production, determines what profit, what income it can receive. The profit of an enterprise or firm depends on two indicators:

· Prices for 5 products

· production costs

The price of products on the market is a consequence demand interactions 6 and suggestions 7. Under the influence of the laws of market pricing in conditions of free competition, the price of products cannot be higher or lower at the request of the manufacturer or buyer; it is automatically equalized. Another thing is the cost of production factors used for production and sales activities, called “production costs”. They can increase or decrease depending on the volume of labor or material resources consumed, the level of technology, the organization of production and other factors. Consequently, the manufacturer has many cost-cutting levers that it can put into action with skillful management. What is meant by production costs, profit and gross income?

IN general view production and sales costs (cost of products, works, services) represent the valuation of natural resources, raw materials, materials, fuel, energy, fixed assets, labor resources used in the production process of products (works, services), as well as other costs for its production and implementation.

The costs of production and sales of products include costs associated with:

· direct production of products, determined by technology and organization of production;

· use of natural raw materials;

· preparation and development of production;

· improving the technology and organization of production, as well as improving the quality of products, increasing their reliability, durability and other operational properties (non-capital costs);

· invention and rationalization, carrying out experimental work, manufacturing and testing models and samples, payment of royalties, etc.;

· service production process: providing production with raw materials, materials, fuel, energy, tools and other means and objects of labor, maintaining fixed production assets in working condition, fulfilling sanitary and hygienic requirements;

· providing normal conditions labor and safety;

· production management: maintenance of employees of the management apparatus of an enterprise, company and their structural divisions, business trips, maintenance and servicing of technical management equipment, payment for consulting, information and audit services, entertainment expenses related to the commercial activities of enterprises, companies, etc.;

· training and retraining of personnel;

· contributions to state and non-state social insurance and pensions, to the State Employment Fund;

· deductions for compulsory health insurance, etc.

The specific composition of costs that can be attributed to production costs is regulated by law in almost all countries. This is due to the features tax system and the need to distinguish the company’s costs according to the sources of their reimbursement (included in the cost of production and, therefore, reimbursed at the expense of prices for it and reimbursed from the profit remaining at the disposal of the company after paying taxes and other obligatory payments).

In Russia, there is a regulation on the composition of costs for the production and sale of products (works, services), included in their cost, and on the procedure for generating financial results taken into account when taxing profits.

1.1.2 Approaches to cost estimation

There are two approaches to cost estimation:

· accounting

economic

Both accountants and economists agree that a firm's costs in any period are equal to the value of the resources used to produce the goods and services sold during that period. The company's financial statements record actual ("explicit") costs, which represent the cash costs of paying for the production resources used (raw materials, supplies, depreciation, labor, etc.). However, economists, in addition to explicit ones, also take into account “implicit” costs. Let's illustrate this with the following example.

Let's assume that the firm invests borrowed capital, which it took from the bank, in production; then the costs would include funds for repayment bank interest. Consequently, provided that attracted capital is invested 8, implicit costs in the amount of bank interest must be excluded from the firm’s income.

However, even the concept of “implicit costs” does not provide a complete picture of the true costs of production. This is explained by the fact that out of many possible options for using resources, we make one specific choice, the uniqueness of which is forced by the limited resources.

So, for example, when we get carried away with TV, we miss the opportunity to read a book; when we go to college, we lose the opportunity to receive a salary if we were engaged in this or that job.

Therefore, when making this or that production decision and estimating actual costs, economists consider them as costs of missed (lost) opportunities.

“Lost opportunity costs” mean the costs and losses of income that arise when choosing one of the options for production or sales activities, which means abandoning other possible options.

Let's look at an example. JSC Stroitel invested 300 million rubles. in the production of cranes; According to the financial report, net profit amounted to 35 million rubles. But if these 300 million rubles. were invested in paper production, then the joint-stock company could receive 67 million rubles. net profit.

What is the profit of JSC Stroitel from the point of view of an accountant? 35 million rub. But from the point of view of an economist, a loss of 32 million rubles is obvious. (67-35). Thus, opportunity cost can be viewed as the amount of income that factors of production could have provided to the firm if they had been more profitably used in alternative options.

Let's summarize all of the above.

The firm's costs in any period are equal to the cost of the resources used to produce the goods and services sold during that period. The profit of an enterprise depends on the price of the product and the cost of its production. The price of products on the market is a consequence of the interaction of supply and demand. Here, the price changes under the influence of the laws of market pricing, and costs can increase or decrease depending on the volume of labor or material resources consumed.

It should also be noted that the specific composition of costs that can be attributed to production costs are regulated by law in almost all countries.

1.2 Ways to reduce costs

As already noted, in conditions of free competition, the price of products produced by enterprises and firms is automatically equalized. It is affected by the laws of market pricing. At the same time, every entrepreneur strives to obtain the maximum possible profit. And here, in addition to the factors of increasing the volume of production, promoting it to unfilled markets, etc., the problem of reducing the costs of production and sales of these products, reducing production costs, inexorably comes up.

In the traditional view, the most important ways to reduce costs is to save all types of resources consumed in production - labor and material.

Thus, a significant share in the structure of production costs is occupied by wages (in Russian industry - 13-14%, developed countries- 20-25%). Therefore, the urgent task is to reduce the labor intensity of manufactured products, increase labor productivity, and reduce the number of administrative and service personnel.

Reducing the labor intensity of products and increasing labor productivity can be achieved in various ways. The most important of them are mechanization and automation of production, development and application of progressive, high-performance technologies, replacement and modernization of outdated equipment. However, measures to improve the equipment and technology used will not give the proper return without improving the organization of production and labor. Often, enterprises and firms purchase or lease expensive equipment without preparing for its use. As a result, the utilization rate of such equipment is very low. The funds spent on the purchase do not bring the expected results.

Proper organization of labor is important for increasing labor productivity: preparing the workplace, fully loading it, using advanced methods and techniques, etc.

Material resources occupy up to 3/5 in the structure of production costs. Hence the importance of saving these resources and their rational use is clear. The use of resource-saving technological processes comes to the fore here. It is also important to increase the demands and widespread use of incoming quality control of raw materials, components and semi-finished products received from suppliers.

Reducing depreciation costs of fixed production assets can be achieved through better use of these assets and their maximum utilization.

Foreign enterprises also consider such factors as reducing production costs, such as determining and maintaining the optimal batch size of purchased materials, the optimal batch size of products launched into production, and deciding whether to produce individual components or components from other manufacturers themselves or purchase them from other manufacturers.

It is known that the larger the batch of purchased raw materials, materials, the greater the average annual stock and larger size costs associated with storing these raw materials (rent for warehouse premises, losses during long-term storage, losses associated with inflation, etc.). However, purchasing raw materials in large quantities has its advantages. Costs associated with placing an order for purchased goods, accepting these goods, monitoring the passage of invoices, etc. are reduced.

1.2.1 Cost reduction program

We can roughly distinguish three stages of cost reduction (reduction):

· Express reduction (can be done within a few days).

· Rapid reduction (requires several weeks or months).

· Systematic reduction (involves work for at least several years).

The duration of the stages of the cost reduction program is commensurate with their effect: for the first it will be the fastest and very modest, and for the third it will be very slow, but the most significant.

Stage I. Express reduction

At this stage, a decision is made to immediately stop financing those cost items that management considers unacceptable given the current financial situation of the enterprise. The following sequence of actions is possible:

· Carrying out the most detailed cost inventory enterprises (performed by employees of the financial and economic department).

· Determination of the category of each expense item and impact analysis refusal of unnecessary expenses. It is recommended to develop solutions at a collective meeting with the participation of heads of all key departments. (The four main expense categories are shown in the table.)

· Complete cessation of financing of the fourth category of expenses if the goal is to reduce costs. In critical financial condition it is necessary to stop or sharply limit spending on the third category. In certain cases, it is possible to limit the costs of the first and second categories, although it is useful to remember the proverb: “The miser pays twice.”

Classification of expenses by priority:

Type	Description	Examples
High priority	Items for which, if funding ceases, there is a threat of stopping operating activities	· Payment for raw materials and materials for production · Remuneration of key workers
Priority	Items, the termination of funding of which would cause damage to the normal conduct of business	· Mobile payments for key employees
Acceptable	Items that it is advisable to save if the company has available funds	· Payment for sanatorium treatment of employees · Payment for educational seminars for employees
Unnecessary	Items the termination of financing of which will not have a significant impact on the conduct of business	· Payment for executive holidays

Stage II. Quick cut

At this stage, the enterprise takes organizational and technical steps to reduce the company's fixed and variable costs to an acceptable level. We can recommend the following work algorithm :

· At the meeting, the main factors influencing the appearance of a particular cost item are determined. Methods are selected to reduce costs for each item. For example, the cost of raw materials and supplies may be influenced by the following: purchase prices; technology-driven procurement volume requirements; overexpenditure associated with inaccurate adherence to technology and a high level of defects; theft. Thus, four areas of work are outlined:

Reduced purchase prices;

Analysis of the validity of the applied production technology and selection of the most economical one;

Identifying the causes of overspending and improving the most “defective” technologies;

Combating theft in the workplace.

· The implementation of the developed measures is entrusted to specialized departments (for example, the task of reducing purchase prices is transferred to the procurement department, and the task of combating theft is transferred to the security service). Units must submit plans with clearly defined timelines, expected (measurable) results and persons responsible for each stage. If the department convinces the director that the proposed method cannot reduce costs, employees are required to develop alternative solutions to reduce costs.

· The cost reduction program is implemented under the personal control of the General Director. The financial department regularly (at least once a month) evaluates the achieved economic effect and informs management about it.

Some ideas for “quick” solutions to achieve economic benefits at this stage are given below.

Reducing costs for raw materials and materials. Costs for raw materials and supplies are one of the most significant cost elements in industrial enterprises. There are a number of methods for systematically reducing this category of costs as part of organizational and technological improvements. One of the “quick” solutions to reduce raw material costs is to review contracts with suppliers.

As a rule, large market players have a large financial leverage, so they can supply raw materials at lower prices and provide payment deferrals. If your enterprise is large, you can organize tenders for the supply of main items in the range of raw materials. It is important to remember: as a rule, there are companies on the market that are ready to supply similar products at lower prices.

Reduce overhead costs. The overhead costs of most enterprises include the costs of telecommunications, electricity, and transportation. Below are some possible measures to "quickly" reduce these categories of expenses, based on the experience of real enterprises. Of course, the list of costs and possible measures to reduce them is not exhaustive, but can provide some practical ideas.

Electricity:

Introduce energy saving programs (for example, ensuring that employees turn off lights and all unnecessary equipment);

Limit lighting of the premises and territory at night (to what is technologically necessary);

Switch to economical lighting (IKEA light bulbs) and equipment (for example, the introduction of a modern boiler system or autonomous compressors can pay for itself within a year).

· Transport:

Limit the number of official vehicles;

Consider the issue of outsourcing the functions of a motor transport workshop to a motor transport company;

Attract logistics company(or a professional logistician) for advice on minimizing transport costs.

Telecommunications:

Reduce the list of employees who are paid for mobile communications, set an expense limit for each;

Limit the number of telephones that allow long-distance calls, oblige employees to use IP telephony services (much cheaper);

Limit the number of computers with Internet access (if the company is not involved in the information or consulting business); In addition, you can install a program on the company server that filters traffic by keywords, and also block popular entertainment sites;

Agree with one of the large (this is important, since small companies, as a rule, charge higher rates to their customers) telecommunications companies about package services (telephone plus Internet), if possible, arrange a tender.

· Information technology costs:

Make a decision on standardization of computer equipment and software in the company; it is advisable to enter into an agreement with a large supplier for package services;

Conduct an inventory of databases and other sources of business information, streamline the acquisition of this information;

Centralize subscriptions to newspapers and magazines.

Reduction of the wage fund. Reducing staff is often a painful but necessary step. During a period of growth and conquest of new markets, the company inevitably attracts many specialists. At a certain point, it may grow unnecessarily and the wage fund (payroll) will eat up a significant part of its income. For example, after the 1998 crisis, enterprises focused on domestic consumers began to increase output and employment. Often, product output increased by one and a half times, revenue by two (due to rising prices and changes in product range), and staff by three. This meant a decrease in the efficiency of workers in monetary terms by one and a half times, and in quantitative terms (output per person) by two times.

It must be remembered that “extra people” mean not only the enterprise’s losses in terms of wages and social contributions, but also the costs of maintaining the workplace and, most importantly, the labor costs of the “necessary people.” For example, the only office secretary, while preparing coffee for a slacker manager, may miss important calls. An unnecessary controller, who invents new forms of sales department reports to justify his usefulness, forces department employees to spend several hours a week filling out empty papers instead of working with clients.

Stage III. Systematic reduction.

At this stage, the enterprise initiates a number of organizational change projects, each of which can have a significant impact on the level of costs. Since we are talking about high-priority projects, it is recommended for each to appoint managers who are personally responsible for the implementation of all stages of the project and devote a significant part of their working time to this. The manager must have sufficient authority, since the solutions he proposes will be reflected in new work regulations, organizational charts, changes in production technologies, subordination, payment methods, etc.

Systematic cost reduction is associated with improved management in three areas:

· investments 10 ;

· procurement;

· production processes (improvements due to organizational and technological changes).

These three processes—investment, purchasing, and production—represent the lion's share of a company's expenses. Let us consider step by step the measures that can be taken to improve them.

Investment management. Any enterprise is an environment in which there is constant competition for investment resources. If current expenses are often obligatory (raw materials, electricity and wages provide ongoing production activities and sales), then investment projects create new business opportunities. Depending on whether a business purchases a better machine or software, it can gain or lose a competitive advantage.

Many enterprises apply the principle of a two-stage selection of investment projects. At the first stage, the unit initiating the project prepares a preliminary application justifying its feasibility. After weeding out less competitive ideas, at the second stage a feasibility study of the project is calculated (with the involvement of independent experts - internal or external consultants with experience in examination and similar calculations). After this, projects that have the best economic indicators (payback period, internal rate of return, etc.) are selected.

Procurement management. Purchasing activities are the main cost area of an enterprise. Purchasing needs mainly arise in the production and auxiliary departments of the enterprise. It depends on the buyer how effectively these needs will be met in terms of product range and cost. Therefore, regular improvement of the purchasing process and search for more profitable suppliers is the key to maintaining the company’s sustainable competitive advantages.

Production business process management systems. The basic model of the work of Russian enterprises (especially industrial ones) was laid down during the period of industrialization of the 30s of the twentieth century, when the famous Ford plant in River Rouge was a role model. The three pillars of this model are:

· functional specialization of employees;

· maximum standardization of components;

· the leading role of technology.

Therefore, if you ask a technical specialist of almost any Russian enterprise how to reduce production costs, he will answer: you need to install new, more productive equipment .

1.2.2 Introduction of information technologies and their impact on costs.

Productivity is determined by many factors. The two most important ones are revenue growth and cost reduction. An enterprise can improve both indicators by using modern methods automation of business processes in the field of sales and procurement. To understand how these solutions work, you need to gain a more complete understanding of enterprise business processes.

Business process.

A business process is a collection of specialized, measurable tasks performed by people or systems to achieve a predetermined result. The processes have the following important characteristics:

· Processes have internal and external users.

· They occur within or between divisions of an organization or between different organizations.

· They are based on the nature of work performed in a given organization.

Below are examples of business processes:

· Permission to receive a loan

· Product development

· Travel planning

· Opening a new account

· Reply to price request

· Transportation of goods

From the very beginning computer technology organizations have sought to use them to improve their business processes. Initially, the emphasis was on enterprise resource planning. The main areas where automation was introduced were manufacturing, accounting, purchasing and logistics. The next step was automation of sales and marketing. After this, it was time to manage relationships with clients and suppliers. Recent years have seen the introduction of Business Process Management (BPM). Businesses use VRM in areas where it can lead to significant positive change. Some of these processes involve the work of several parts of the company, while others are the result of real-time interactions with suppliers, customers and other business partners.

Business Process Management (BPM)

BPM automates and streamlines business processes vital to the company in order to increase productivity. From hiring workers to processing a purchase order, BPM helps redesign, monitor and manage production flows, using people and solutions to execute the process more efficiently.

E-procurement and e-sales

For any business, two processes are vital - purchasing and selling. Although these processes are an integral part of supply chain management, it is only by optimizing and automating them that a business can achieve significant productivity gains, even when the entire chain is not yet fully streamlined. This can be achieved through e-procurement and e-commerce solutions. The advantages of these solutions:

Direct:

· Cost reduction

· Revenue growth

· Increased productivity

· Reduced overhead costs

· Streamline supply chain processes

Indirect:

· Ability to redistribute freed resources for key business processes

·Improved service level

· Access to a large number of suppliers in a relatively short period of time

· Improving the quality of customer relationship management

· Maintaining competitiveness

For small enterprises that do not yet have the necessary resources to develop or purchase the above solutions, but there is a desire to see how business process automation works in reality, there are B2B (Business to Business) trading platforms, having standard solutions included in their systems.

In fact, the use of these simple but effective solutions can radically change the management of an enterprise. However, the degree of success will depend on the following factors:

· Implementation should concern management and individual departments.

· The presence of a strong leader and support from both management and subordinates is necessary.

· Both buyers and suppliers must be included in the implementation process.

· Workers should be trained as the application is implemented.

Conclusion

In accordance with the goals set at the beginning of the work, I will summarize the research.

The specific composition of costs that can be attributed to production costs is regulated by law in almost all countries.

Main types of costs. So, it is accepted to divide the production costs of an enterprise into constant, variable, gross and marginal. Fixed and variable costs together make up the gross production costs.

In enterprises, the cost structure is often understood as the relationship between fixed and variable costs, which allows one to analyze the structure and draw conclusions about the quality of production.

The most important ways to reduce production costs is to determine the optimal amount of purchased resources and launched products consumed in production - labor and material. As well as reducing the labor intensity of products and increasing productivity.

The main point of modern economics about production costs: to get more of any good, it is necessary to provide potential producers and suppliers of this good with a certain incentive that would encourage them to transfer resources from the sphere of their current use to the production of what we want. It is necessary that the benefits of such a transfer exceed the costs of it, i.e. exceeded the value of the opportunities that potential entrepreneurs would have to give up.

Costs are always the result of supply and demand. An increase in demand for any good will increase the cost of purchasing this good only insofar as it does not cause an increase in the quantity of supply.

List of used literature:

1. Borodina E.I. - Enterprise finance - Moscow: 1995.

2. Bru S., McConnell - Economics vol. 2 ed. 2006.

3. Gorfinkel V.Ya., prof. Kupriakova E.M. - Enterprise Economics - Moscow: 1996.

4. Gruzinov V.P. - Enterprise Economics and Entrepreneurship - Moscow: 1994.

5. Mutnyan A.V., Okonnikov I.M., Panteleev E.A. - Microeconomics - Izhevsk: 2003.

6. Peters M., Hizrich R. - Entrepreneurship - Moscow: 1989.

7. Savitskaya G.V. - Anal from economic activities - Minsk - Moscow: 1999.

8. Sidorovich A.V. - Well economic theory- Moscow: 2007

9. http://www.gd.ru/ “General Director” September 2008

10. http://ezine.rusbiz.ru/ " Electronic magazine for business people"

Questions for self-control:

1.What are costs?

2.What is the consequence of the product price?

3.Types of cost estimates?

4.Is the specific composition of costs regulated by law?

5.Do material resources affect costs?

6.What are the 3 stages of a cost reduction program?

8.How does information technology affect costs?

Test

1. What does the profit of an enterprise depend on?

A. on the price of the product

B. depending on the type of resource

A. product demand

B. product offerings

In the interaction of supply and demand

A. theoretical

B.economic

V.accounting

A. Minimizing profits

B. Increasing the loan amount

B. Profit maximization

A. Express reduction

B. Systematic reduction

B. Hyper contraction

D. Rapid reduction

A.investment

B. demographic situation

B. procurement;

D. production processes

Glossary

1. Production costs - expressed in monetary terms, the total cost of living labor and material resources for the production of products or services.

2. Enterprise - a separate specialized unit, the basis of which is a professionally organized labor collective, capable, with the help of the means of production at its disposal, to produce the products needed by the consumer (perform work, provide services) of the appropriate value.

3. Resource - means that allow, through certain transformations, to obtain the desired result (natural resources, labor, etc.)

4. Cost - all costs (expenses) incurred by the enterprise for the production and sale (sale) of products or services.

5. Price is a monetary characteristic of a good.

6. Demand is the quantity of a product that buyers are willing to buy at a given price.

7. Supply is the quantity of a product that is available for sale at a certain price.

8. Capital - a set of goods, property, assets used to generate profit and wealth.

9. Profit is the excess in monetary terms of income from the sale of goods and services over the costs of production and sale of these goods and services.

10. Investments - long-term investments of capital with the aim of generating income.

Answers to the Test

2. What does the profit of an enterprise depend on?

A. on the price of the product

B. depending on the type of resource

B. from the cost of production

2. What is the consequence of the product price?

A. product demand

B. product offerings

B. interaction between supply and demand

3. What approaches to cost estimation exist?

A. theoretical

B.economic

V.accounting

4. What is the manufacturer aiming for?

A. Minimizing profits

B. Increasing the loan amount

B. Profit maximization

5. Which step is not part of a cost reduction program?

A. Express reduction

B. Systematic reduction

B. Hyper contraction

D. Rapid reduction

6. What is not associated with systematic cost reduction?

A.investment

B. demographic situation

B. procurement;

D. production processes

System lean manufacturing(lean manufacturing) originated in the bowels of the Toyota concern, and then became popular throughout the world. It is based on the constant desire to reduce costs and unnecessary operations on different stages product creation. Companies working on it encourage employees to come up with various improvements (kaizens) and spend working hours as efficiently as possible. This approach to work is especially relevant when it is necessary to reduce costs. The Village learned from a representative of a company that has been working on the lean system since 2007 how it can be implemented in Russia.

Cost optimization

To begin optimizing costs, you first need to understand where costs come from. An accountant does not always detail expenses by item, but it is important for a manager to know this. When we started implementing the Japanese lean system in 2007, we held many meetings with specialists from our farms and holding divisions. To find out where the money was being spent, we spent a year talking with mid-level specialists. This is one of the principles of lean: all attention to production areas - people at the workplace know best. Many people at first did not like such careful control of expenses, but we were able to put the accounting in order. Department heads can now track how costs are generated and adjust them in real time, rather than waiting until the end of the month when calculations arrive from the accounting department.

Our mechanics are constantly thinking about how to improve equipment so that it wears out less. For every idea that allows us to increase the life of our machines, we pay our employees a monetary reward.

Several years ago, we noticed that premium milk is two to three rubles more expensive than first grade milk, with the same cost. We invited specialists to understand where we were losing quality and introduced the position of quality technologist. Over the year, the share of premium milk increased from 26 to 60%.

In addition, we began to save electricity. We started small: we changed the light bulbs in the workshops to more economical ones. Our power engineers assessed all the equipment and found out which units could be replaced, where a timer could be set so that, for example, heating elements would heat water only during working hours, when it is needed. Last year this brought us 12 million rubles in savings.

To find new ways to reduce costs, we periodically conduct brainstorming sessions in various areas of production. Top managers, regardless of their specialization, go, for example, to a farm and observe its work during the day, draw conclusions, and then each group makes proposals, and an optimization plan is developed. This helps a lot: people from the outside sometimes ask ridiculous questions, which are partly brilliant.

Staff optimization

If a company needs to cut costs, there is no need to immediately cut to the quick and fire employees. It’s worth first understanding what each of them does: perhaps one is underutilized, while the other is working hard. After all, you can retrain a person and transfer him to another department if he has the desire and ability.

If there is a need to make cuts, you should not do it unilaterally. In 2008, when the profitability of our farms was low, management decided to reduce the payroll or personnel by 20%. We gathered the heads of departments and promised to leave half of the money saved due to optimization to the team. When people saw that we were actually delivering the promised funds, the process began. The director of one farm said that he had 15 extra people. The money saved was used to increase the salaries of the remaining employees - their motivation and efficiency increased.

Optimization of working time

We have developed educational materials with step by step description each operation. As a result, people work without losing working time. Thanks to standardization, the milking process, for example, was reduced by three hours. If previously milkmaids worked from 6 am to 12 pm and were very tired, now they go home at 9 am. At the same time, they do the job better: there is more premium milk.

We have moved away from the fact that the boss is an overseer; in our case he has become a technology controller, because all the work of employees is regulated. You won't see people lounging around on a farm; people work harder, are released earlier, and end up getting paid more.

We motivate people to learn workflow technology. Every year it undergoes certification. This affects earnings: the best receive first class and a 20% increase in salary.

Result

Now we produce 51 thousand tons of milk per year, and in 2010 there were 27 thousand tons. At that time, the farm included 24 farms, but we carried out consolidation and optimization - there were 11 farms. Of the 1,200 employees, 650 remained, while the livestock increased from 11 thousand to 15 thousand heads. And if previously the farms were unprofitable, then last year they brought 202 million rubles of net profit. The total economic effect from the implementation of the production system in all divisions of the holding exceeded 750 million rubles.

Every business spends money on producing goods or providing services. Profit is considered to be the difference between the amounts spent on production and gross income, which is also called turnover. In some cases, increase the flow cash you can by understanding which expense items can be reduced, but this must be done very carefully so as not to harm the company’s reputation and not reduce the quality of the goods produced.

What does the company spend money on?

Any enterprise has its own specific expense items that help it function fully. All of them can be intelligently optimized, which will certainly bring increased profits and reduced costs. You have to invest money in the following needs:

wages;
purchase of raw materials;
transportation of materials and finished products;
taxation;
advertising;
maintaining large clients;
rental or maintenance of premises;
utility bills;
maintenance and repair of production machines and units;
other expenses.

Before reducing the costs of an enterprise, it is worth carefully reviewing each of their items and drawing a conclusion about appropriate optimization.

Remuneration

At any enterprise there are hired employees who, for a certain remuneration, perform a designated amount of work. Russian legislation states that the employer can independently regulate the level of wages, lower it or increase it.

However, please note that there is a maximum permissible norm reduction in wages, and the employee cannot receive less.

To optimize the salary expense item, you can take the following measures:

reduce staff;
use outsourcing services;
transfer workers to part-time;
use part-time labor;
reduce the management staff;
automate production to partially or completely eliminate manual labor.

All these points will be effective only if their application does not negatively affect the final goal of each production - profit. For example, if you fire a highly paid woodworking specialist and hire a less qualified but cheaper employee in his place, you may face a decrease in the quality of your products, and this entails the loss of potential customers. It is for this reason that any manipulation with wages must be thought out to the smallest detail.

Purchase of raw materials

What we make the product from is also quite expensive, especially considering the recent devaluation of the ruble and the massive use of imported materials. However, this expense item can also be reduced by the following actions:

searching for more profitable partnerships with suppliers;
assistance with raw material producers;
wholesale purchases together with other companies to receive volume discounts;
implementation of design changes in production to switch to other materials;
independent production of some components, spare parts, etc.;
transition to cheaper analogues;
replacement of imported raw materials with domestic ones.

These actions must be implemented very competently and wisely so as not to reduce the quality of the final product. For example, to make chocolates, it would be more expedient to purchase high-quality cocoa beans, but switch to more affordable packaging, so you can maintain the same composition of the product, but its cost will be lower than before.

Transportation of materials and finished products

Production costs for transport are sometimes fabulous, because raw materials need to be transported from different countries or even continents, and finished goods need to be delivered throughout the country. In this case, it will be beneficial to use the services of logisticians or create such a department at your enterprise. This will maximize the productivity of transport, since it will travel with cargo in both directions, respectively, to pay the driver and fuel. You may also consider partnering with material suppliers that are located closer to your company.

Advertising

To sell a product at a favorable price, you need to present it competently to the end buyer. This is precisely why they are arranged advertising campaigns, the costs of which are often very high. To reduce this cost item, you need to reconsider the following factors:

the budget may be too high and can be reduced without compromising the final result;
searching for new employees, sometimes well-known advertising agencies offer their services at inflated prices, in which case it makes sense to start collaborating with younger and more financially accessible companies;
assessment of advertising profits: it is worth finding out whether advertising is effective, whether it brings more profit than the entire advertising budget, if the indicators are positive, then the companies are fulfilling their functions, if not, then you need to look for the reason for the failure;
settlement with advertisers by barter, this method of reducing costs will be effective if you have something to interest an advertising agency, it can be either a product or a service.

If, when reducing PR costs, you do not get these results, then the savings will be ineffective. It is for this reason that each cost reduction item must be carefully reviewed and analyzed.

Maintaining large clients

Each production makes certain concessions to its large clients and makes for them special offers, introduces loyalty programs, provides additional services. All this entails considerable costs, which reduce the level of profit. You can refuse the most expensive services, for example, SMS notifications to clients about promotions, constant sending of emails, and more. At this point, you also need to weigh the pros and cons of saving, because refusing some services can negatively affect the company’s image and reduce the number of its regular customers.

Rental and maintenance of premises

Any production has a certain area, which is necessary for the comfortable organization of all work processes. It can be a small hangar, or a huge territory of several hundred hectares with premises and workshops for various purposes. Regardless of the size of the premises, you need to pay rent for them or spend money on their maintenance. You can reduce this cost item using the following tips:

revision of the terms of the current lease agreement in favor of the tenant;
moving to another premises that will be more economically profitable;
the possibility of subletting some space;
repurchase of leased premises, if appropriate.

If you are the owner of all premises and production buildings, you can reconsider your expenses for maintaining them in a safe condition for work. Regular current and major repairs can be done using cheaper materials, cleaning of premises can be done without cleaning companies, but with the help of hired employees.

Utility payments

Enterprises use for their activities natural resources, payment for which is now quite expensive, given the special tariffs for production. The following measures can help reduce this cost item:

establishing stricter control over energy savings;
introduction of energy-saving production processes;
transition to bill payment for services.

Equipment maintenance and repair

To ensure that production does not stand idle, you must always keep the equipment in good condition. High-tech machines are most often serviced by special companies, whose services are not cheap. You can reduce waste here too if you reconsider the following factors:

deferment for a long or short period of current repairs of units;
refusal of the services of contractors and repair of machines with the help of their employees;
revision of the terms of the contract with contractors in favor of the company;
search for more affordable companies providing service services.

All these points can significantly reduce the cost of machine repair and maintenance.

However, remember that in some cases it will be more profitable to trust a team of professionals than to create your own service department, since the work of good specialists is expensive, especially when it comes to unit software.

Other expenses

This is a very broad article, which will have its own specific points for each enterprise. For example, you can take a large plant that spends money on the following additional measures:

scientific and design activities;
maintaining a wide range of products;
market research;
work on selecting only certain raw materials with certain characteristics;
constant improvement of the qualification level of employees, etc.

In some cases, these additional costs can be completely avoided if they do not particularly affect the level of product sales. However, when the reputation of the company and the number of its regular customers depend on these factors, it is worth carefully considering cutting costs, because this can lead to a difficult economic situation.

Competent cost optimization: the bottom line Any enterprise can reduce its costs without compromising its reputation, the quality of the final product or working conditions for employees. However, in order to correctly evaluate all reserves, it is necessary to conduct a serious study that will show which cost items would be advisable to cut and which should be left at the same level for the full development of production. Only a carefully thought-out cost-saving plan can produce the desired results.

Production costs Firms represent the expenditure of factors of production in the creation of a good or service.

From the point of view of economists who are interested in the activities of the company and the possibility of its further development, this will be one answer; for accountants, who are mainly responsible for the financial statements and balance sheet of the company, it will be different. Thus, we came to the separation of economic and accounting costs.

Economists' understanding of production costs is based on the fact that resources are scarce and the possibility of their alternative uses. The choice of certain resources to produce one good means that it is impossible to produce another alternative good. In other words, costs in the economy are directly related to the denial of the possibility of producing alternative goods and services.

Economic , or opportunity cost are the costs associated with lost opportunities for the best of other alternative uses of resources.

For example, the opportunity cost of labor time that an entrepreneur spends may be equal, firstly, to the wages he gave up by not selling his labor to another firm as a manager. It should be noted that the salary of a watchman of a neighboring company will not be an alternative cost of our entrepreneur’s working time, since the system of values and priorities that exists in a given economic system plays a role here. Secondly, it can be equal to the cost that compensates for the free time that the entrepreneur sacrificed.

Economic costs - payments that the company is obliged to make, or those incomes that it is obliged to provide to the supplier of resources in order to divert them from use in alternative production.

Accounting costs differ from economic ones in that they do not include the cost of services of factors of production that are the property of the company.

The distinction between economic and accounting costs will become clearer if we introduce the concept of explicit (external) and implicit (implicit or internal) costs.

Explicit (external) costs – cash payments, which the firm produces to suppliers of factors of production, in the event that the factors do not belong to it.

In number Explicit costs include:

Workers' wages,

Managers' salaries

Commission payments to trading companies,

Payments to banks and other financial service providers,

Fees for legal advice,

Payment of transportation costs,

Equipment depreciation,

Costs of raw materials and materials, etc.

This accounting costs.

Not explicit (implicit or internal) costs represent either the cost of factor services that are used but not purchased, or the opportunity cost of using resources owned by the owner of the firm that are received in exchange for explicit (monetary) payments. These costs are not provided for in contracts that require explicit payments, and therefore remain uncollected. In addition, the company uses the building it owns, but at the same time it gives up the opportunity to receive cash payments for renting the building to someone else. Typically, firms do not reflect implicit costs in their financial statements, but this does not make them any less real.

Degree of difference between economic and accounting costs depends on the volume and types of resources provided to the company by its owners, as well as on the form of entrepreneurship. As a rule, large corporations pay wages to all employees, even if they are co-owners of the company. Thus, corporations rarely take into account implicit earnings. However, in them, significant funds are invested in equipment and land, as a result of which the non-explicit (omitted) percentage of invested funds increases and the non-explicit (omitted) rental development of recommendations in this area is one of the cornerstones.

Systematic cost reduction is the main means of increasing the profitability of a company. In a market economy, when financial support for unprofitable enterprises is an exception to the rule, but not the rule, as it was under the administrative-command system. Study of problems of reducing production costs, the stones of the entire economic theory. ???

The following can be distinguished main areas of cost reduction in all spheres of the national economy:

use of scientific and technical progress achievements;

improving the organization of production and labor;

state regulation of economic processes.

Before considering the direction of cost savings, we will make one significant remark. The fact is that the very activity of a company to achieve cost savings in the vast majority of cases requires costs, labor, capital and finance. Cost savings are then effective when the increase in beneficial effect (in a wide variety of forms) exceeds the cost of providing savings. Naturally, a borderline option is also possible, when reducing the costs of producing a product does not change it useful properties, but allows you to reduce the price in competition. IN modern conditions What is typical is not the preservation of consumer qualities, but cost savings per unit of beneficial effect or other characteristics important to the consumer. In practice, this often takes such forms as, for example, reducing the cost per unit of production capacity of a metalworking machine. Most at a fast pace This process occurs in the production of electronic equipment, semiconductors and in a number of other industries.

The use of NTP achievements is, on the one hand, in the more complete use of production capacities, raw materials and materials, including fuel and energy resources, and on the other hand, in the creation of new, more efficient machines, equipment, and new technological processes.

The most characteristic feature of scientific and technological progress in the second half of the twentieth century is the transition to a fundamentally new technological method of production. Its advantage over the existing technological method of production is not only higher economic efficiency, but also the ability to produce qualitatively new material goods, new services that significantly change the entire way of life, the priorities of life values.

As for improving the organization of production and labor, this process, along with cost savings by reducing losses, in almost all cases ensures an increase in labor productivity, i.e. saving labor costs. At the current stage of economic development, saving living labor is comparative with saving social labor and gives more significant results, as evidenced by the study economic growth based on the use of the production function.