Hello! Today we’ll talk about cost reduction. Cost is one of the most important quality indicators of an enterprise's performance. The size of the net profit that an entrepreneur receives depends on its size. By reducing production costs, profitability can be increased. And now we’ll tell you exactly how to do this.

What is cost and why is everyone trying to reduce this figure?

In order to understand how to reduce or (manufactured products), you need to understand what the word “cost” means.

Cost price - this is the total amount of costs that were spent on producing products and promoting them on the market. Expressed in monetary terms and refers to production costs.

Reducing costs is very important for businesses that are just starting out. In addition, you need to think about how to gain a foothold in the market with good quality products, and at the same time achieve at least a level of self-sufficiency.

What is the goal of cost reduction?

• The ability to control the activities of each element of the enterprise from a financial point of view;
• Increase the productivity of the management apparatus, which is expressed in the rapid adoption of effective decisions;
• Possess real information that is taken into account when drawing up the enterprise budget;
• Use flexible pricing, which allows you to expand the capabilities of the enterprise and contributes to the creation of reserves;
• The ability to have valuable information about the market price of your product and competitors’ products;
• The ability to organize the production of high-quality products at a lower price with lower costs.

Reducing the cost of production entails a reduction in the price of the product, due to which the product can compete more successfully in the market.

Factors for reducing production costs

Many factors influence cost reduction. Conventionally, they can be divided into the following:

1. In-production- those that enterprise managers can directly influence. These include: staff reduction, automation of individual processes, staff motivation, etc.
2. Non-production– those that cannot be influenced by the enterprise. These are the cost of fuel, raw materials, tariffs, the amount of tax deductions, etc.

Ways to reduce production costs at an enterprise

An entrepreneur who has decided to reduce the cost of production must clearly understand that this is not a matter of one day. The entire production will be involved in this process. Below are the main methods for reducing costs.

Method 1. Increasing labor productivity

Labor productivity shows how much work each worker performs per unit of time. Most often, staff are not interested in quickly performing their duties. Employees receive a fixed salary, regardless of the quality and quantity of work performed.

In this case, the manager is faced with the task of getting workers to complete more work in a minimum amount of time. This can be done through motivating conversations, financial incentives, etc.

You can also change the payment system. That is, the employee will not receive a fixed salary every month. The size of his payments will directly depend on the quantity and quality of the products he produces. Thus, each worker will strive to complete as much work as possible.

Method 2. Automation of production, introduction of innovative technologies

In the modern world, we have learned to replace human labor with machine labor. Sometimes it is more reliable and, undoubtedly, more economically profitable. To reduce the cost of manufactured goods, it is important to automate production as much as possible in all processes.

This will reduce the number of employees, which entails a reduction in costs associated with paying wages. With the involvement of technology, labor productivity and the volume of goods produced increase several times.

Method 3. Compliance with saving mode

All stages of production must be involved in the savings process. It is necessary to calculate where and how much money can be saved without compromising the quality of the product.

Method 4. Selecting the right partners

Any production process involves close cooperation with a large number of organizations. These are suppliers of raw materials, carriers, etc. It is very important to competently approach the selection of each of them.

For example, when choosing suppliers of raw materials, you need to pay attention to their geographical location. Give preference to suppliers who are located near your production. This way you will save on transport costs.

Method 5. Reducing the cost of maintaining management personnel

Some enterprises have a “bloated” workforce, with almost one manager for every employee. In order to do so, it is necessary to review the job responsibilities of each employee of the management apparatus and, if possible, combine several positions into one.

In this case, employees may rebel, but you can offer a salary increase or bonus of 25-30% of their salary. Thus, by reducing one position, but paying bonuses to other employees, this can significantly save the enterprise’s budget.

Method 6.

In order for employees to produce higher-quality products, while reducing the number of defects, it is necessary to regularly improve the qualifications of employees.

For example, you are the head of a private medical center. In this case, your employees will not be harmed by advanced training courses, medical seminars, etc. This is where specialists exchange experiences, learn new things, and get acquainted with innovative equipment. Thanks to this, they put their knowledge into practice, and the number of grateful patients increases. They, in turn, create advertising for you and attract other clients.

Method 7. Saving raw materials, fuel, electricity, etc.

In order to achieve a reduction in production costs, it is necessary to constantly monitor the rational use of raw materials. For example, if in a clothing factory, where there is a lot of fabric for sewing, the craftsmen do not save it and cut the material thoughtlessly, a large amount of waste is generated.

In addition to raw materials, it is important to save other resources, such as fuel, electricity, etc. At a minimum, it is necessary to introduce energy-saving equipment into production and train personnel to save electricity.

Method 8. Enterprise consolidation, cooperation

By expanding production and producing a larger range of products, it is possible to reduce the cost of work. It is also very important to establish mechanized production of goods. Thanks to this, production volumes increase and the price of this product decreases.

Method 9. Reducing the production of defective products

Every enterprise has defective products. The reason for this may be either the human factor or the poor functioning of the equipment. Carry out an analysis and find out what exactly causes frequent marriages and try to minimize this factor.

Method 10. Keep up with the times

Periodically research the market, monitor the demand for your products and watch your competitors. In addition, implement new technologies. This applies not only to equipment, but also to the personnel management system.

This is not a complete list of measures to reduce production costs. But they are the ones who are able to bring maximum results in the shortest possible time.

Drawing up a plan to reduce costs

Only clear, controlled actions can reduce the cost of products and take production to a new level. To do this, it is necessary to draw up an action plan aimed at saving the production budget.
First, you will need to collect all the data on the costs of the enterprise. It is important to take into account all the little things. After all, very often they are the cause of unjustified costs.

Secondly, it is necessary to divide all costs into the following categories.

• Conditionally permanent;
• Conditional variables.

Thirdly, all the data obtained must be analyzed and a cost reduction plan drawn up for each type of expense. You can create it using the following tips:

1. Determine the desired percentage reduction in absolutely all costs and expenses per unit of production;
2. Make a list of actions and activities that will save the enterprise’s budget. Assign those responsible for completing each item and set deadlines;
3. Calculate the effect you plan to get from completing each item. It must be expressed in monetary terms.

Let us give elementary examples of cost reduction. Try to issue office supplies in smaller quantities. This is unlikely to affect the quality of the work performed, but this way you will save your campaign budget.

Or another example, now every office has Internet access. Review the service agreement with the provider company. Discuss with their representative about providing more favorable conditions for you. Every communication provider values ​​​​the client, so with a high probability we can say that they will meet you halfway.

Fourthly, after implementing a plan to save and reduce costs, it is very important to monitor it. Without proper control, success cannot be achieved. This may take a lot of time from the manager, but this is the only way you will understand which of the points in your plan really works.

It is important to interest the working staff and force them to switch to saving mode. You can stimulate employees through conversations or various incentives.

What does an actual reduction in production costs entail?

An enterprise that has managed to reduce production costs always gains a foothold in the market. Thanks to the reduced price of a product, consumers are more willing to buy it.
The effectiveness of cost reduction can also be observed in production itself. At such an enterprise, the staff is more interested, organized and hardworking. New equipment makes workers' work easier, making it safer.

Management thoroughly knows all the “weak” and “strong” sides of their enterprise. Therefore, he is constantly trying to improve production.

Such organizations work like one well-oiled machine, which allows it to flourish and receive maximum profit.

Conclusion

An enterprise that needs to reduce production costs will have to switch to saving mode. This process should affect all areas of production. It is important to ensure that the reduction of enterprise costs does not cause a deterioration in product quality. In this case, the savings will be unjustified.

Reducing costs involves an in-depth analysis of the enterprise's costs and carrying out a large number of activities, on the basis of which ways to save are outlined. The main ones are:

1. Reduced material consumption;
2. Reduced labor intensity;
3. Cost reduction due to reduction of management staff.

You will have to save for more than one month on everything. This is a long process that in most cases brings positive results. Reducing costs allows for the production of a competitive product.

If your enterprise does not make a profit and does not pay for itself, you are before the line. You urgently need to start reducing production costs. This is the only way to stay afloat, which will allow you to take your business to a new higher level.

Great opportunities for reducing the cost of manufactured products lie within the production process. Work on analyzing the materials used and revising the production process must be carried out constantly, especially on products that the company has been producing for a long time.

WORK TO REDUCE PRODUCTION COSTS

In order to increase the efficiency of an enterprise, it is necessary to periodically review the production process from the point of view of finding ways to reduce costs.

Work to reduce production costs is carried out in two directions:

1) review of the product design;

2) change in production technology.

To carry out work to reduce costs it is necessary to form a working group, consisting of specialists from the design bureau, technological, production, planning and economic departments and marketing services.

The working group reviews every detail of the product and brings up the following questions for discussion:

• Can this part be made from cheaper material and in a cheaper way?
• Is there any excessive processing involved in the manufacture of the part?
• Will a change in material or technology lead to a change in consumer properties?
• If consumer properties deteriorate, how critical will this be for consumers?

After considering these issues, a reasoned decision is made.

The effectiveness of this group is determined by the amount of savings from the implementation of their proposals.

WE CALCULATE THE AMOUNT OF SAVINGS

Amount of savings when introducing new types of materials depends on change consumption rates And unit prices material and is calculated by the formula:

E nm = (N 0 C 0 - N 1 C 1) × K,

where E nm - savings from the introduction of new types of raw materials and materials, rub.;

N 0, N 1 - the rate of consumption of a given type of raw material, material, fuel per unit of production in the appropriate units of measurement before and after the implementation of organizational and technical measures;

Ts 0, Ts 1 - unit price of a given type of raw material, materials, fuel before and after the implementation of the event, rubles;

K is the volume of production (or the volume of consumption of a given type of resource) in a given period.

Members of the working group, considering the manufacture of each part, proposed replacing the material in one of them.

The part is made of cold-rolled steel with a thickness of 0.8 mm; it is proposed to replace the material with cold-rolled steel with a thickness of 0.7 mm. This will not affect the consumer properties of the product.

The calculation of savings is presented in table. 1.

Despite the fact that the price for steel with a thickness of 0.7 mm is slightly higher than the price for steel with a thickness of 0.8 mm, the amount of savings is 321 thousand rubles.

Conclusion:the solution is rational, it must be implemented into the production process.

Savings from reducing the rate of consumption of material resources calculated by the formula:

E N = (N 0 C - N 1 C) × K,

where E N is the amount of savings from reducing the rate of consumption of material resources, rub.;

N 0 and N 1 - the rate of consumption of a given type of raw material, material, fuel and energy per unit of production in the corresponding units of measurement (kg, t, m, etc.) before and after the implementation of organizational and technical measures;

P — unit price of a given type of raw material, materials, fuel, energy, rub.

K is the volume of production for which consumption rates are changed in connection with the implementation of this organizational and technical measure in the planned period, in appropriate units.

The working group reviewed the parts manufacturing process and found that some parts made from 2mm thick steel had a high percentage of business waste. This is due to the cutting of iron sheets. An option was proposed to change the cutting and, as a result, reduce the rate of material consumption by 3%. The calculation of savings is given in table. 2.

The savings under this proposal amounted to 59 thousand rubles. Conclusion: offer to accept.

Salary savingsproduction worker pay and fees charged on their salaries can be achieved through the development and implementation of organizational and technical measures that ensure a reduction in the labor intensity of manufactured products. This indicator is calculated using the formula:

E sd = (V 0 T 0 - V 1 T 1) × (1 + (C / 100)) × K,

where E sd is the amount of savings on piecework wages and fees accrued to the wage fund, rubles;

B 0, B 1 - standard time for production of a unit of product before and after events, standard hours;

T 0 , T 1 — tariff rate corresponding to the type of work performed, rub.;

C - the established percentage of deductions from the wage fund;

K is the number of products for which the time standard is reduced due to events.

Considering the technological process of manufacturing parts, the working group came up with a proposal to move the production of some parts to other technological equipment. This change in the production process will not affect the quality of manufacturing of parts; the overall time standard for the entire product will remain the same, but less qualified workers will perform the work, with a lower tariff rate. Due to this, savings will be achieved. Calculation of savings - in table. 3.

The savings under this proposal will amount to 8.4 thousand rubles. Conclusion: The proposal is rational and must be accepted.

R. V. Kazantsev, executive director of LLC "UK Teplodar"

The material is published partially. You can read it in full in the magazine

15. Factors of reduction (increase) of cost are understood as such changes in the conditions of production activity of an enterprise that affect the absolute value of production costs and the level of costs per ruble of marketable products.

16. It is recommended to calculate cost based on technical and economic factors according to the following scheme:

the costs of the base period are determined per 1 ruble of marketable products. The base level of costs is the costs of the previous period.

By multiplying the costs of the base period by the volume of marketable products of the planned period, its cost is calculated while maintaining the conditions of production and sales of products in the base period, i.e. the volume of marketable products of the planned period is taken at the prices and conditions of the base year (without taking into account the impact on individual and average (group) prices of improved product quality, changes in production location and other conditions);

a decrease (increase) in costs included in the cost of production is determined, due to the influence of individual technical, economic and other factors.

17. When determining savings due to the action of all technical and economic factors (except for changes in the volume of production and the use of fixed assets), only the reduction of variables directly proportional to the volume of production and costs is taken into account. Relative (per 1 ruble of marketable products) savings in semi-fixed costs and depreciation charges are considered as a result of an increase (decrease) in the volume of production and improved use of fixed assets. The influence of each technical and economic factor on the level of production costs is determined by calculations using the methodology given below.

18. Savings due to an increase in the level of technology and organization of production are determined taking into account the time of carrying out the relevant activities. If the event planned in the plan is not carried out from the beginning of the year, then the calculation reflects only part of the effect obtained during the period from the beginning of the implementation of the event to the end of the year. If an activity is implemented in the base period, then the carryover savings from implementation in the base period must be taken into account in the planning period.

This saving is equal to the difference between the value of conditionally variable costs per unit of production in the base period and their value after carrying out organizational and technical measures, multiplied by the volume of production of the corresponding types of products in the planning period.

Formula:

At the same time, it is necessary to ensure that the impact of changes in the structure and quality of the supplied material resources on their cost is not taken into account again, for example, by the factor “Increasing the technical level of production.”

27. The impact on the cost of production of reducing defects is calculated as a whole, regardless of what measures result in a reduction in defects.

For the products of factories processing non-ferrous metals, carbide and carbon industries, where defects are planned, the impact on the cost of reducing losses from defects in the planned year is equal to the amount of savings from eliminating excess defects and from reducing the rate of planned defects.

28. In calculating the impact of changes in the volume and structure of manufactured products, the following main factors are highlighted:

Relative change in semi-fixed expenses (except for depreciation), caused by a change in the volume of production;

The degree of use of fixed assets and the associated relative change in depreciation charges;

Changing the structure (nomenclature and assortment) of products.

A change in the volume of products produced leads to a relative (per 1 ruble or unit of marketable product) change in semi-fixed costs.

Depreciation and repair fund (where it is created) are classified as semi-fixed expenses, but the relative change in these costs is determined by calculating individual factors.

The magnitude of the relative reduction in semi-fixed costs is determined based on the share of these costs in the cost of marketable products of the base period.

Considering that an increase in the volume of manufactured products causes a slight increase in semi-fixed expenses, for calculations of the planning period the share of semi-fixed expenses of the base period is clarified. To do this, conditionally fixed costs are reduced to completely constant using the following formula:

Where:

UP - the share of the given conditionally fixed costs in the cost of marketable products of the base period or in individual cost elements (expense items) in%;

Y - the share of semi-fixed costs in the cost of commercial products or in individual cost elements (expense items) in the base period in %;

Тп - growth rate of the volume of marketable products in the planned period in comparison with the base period in %;

Tz is the growth rate of this type of cost due to an increase in production volume in %.

The reduction in unit cost of production (100 rubles of income) is calculated using the formula:

where Svyp is the cost of completion, rub.;

Cpl – planned cost.

By reducing the cost per unit of production, the enterprise receives cost savings on production and sales of products, which is calculated using the formula:

Example. Determine the reduction in the cost of a unit of production (100 rubles of revenue) and the amount of cost savings due to a reduction in the cost of a unit of production according to the following data: cost of 100 rubles. income according to the plan is 74 rubles, revenue according to the plan is 98,642 thousand rubles, costs of production and sales of products will actually increase by 2.5% compared to the plan, revenue has been fulfilled by 105.6%.

1) Determine the total cost according to the plan:

rub.

Zpl=Spl*Vrpl/100=74*98642/100=72995.1 thousand rubles.

2) Let’s determine the costs of production and sales of products to fulfill:

Zvyp=72995.1*102.5/100=74819.97 thousand rubles.

3) Let’s determine the revenue completed:

Vrvyp=98642*105.6/100=104165.95 thousand rubles.

4) Determine the cost of 100 rubles. proceeds from implementation:

Swap=Zvyp/Vrvyp*100=74819.97/104165.95*100=71.83 rub.

5) Determine the reduction in cost of 100 rubles. revenue according to the formula:

6) Let’s determine cost savings by reducing production costs:

Conclusion: The cost of 100 rubles of revenue compared to the plan decreased by 2.17 rubles, which is 2.93% as a percentage, due to a decrease in the cost of 100 rubles. revenue, the company will receive savings in the amount of 2260.4 thousand rubles.

18.5 Sources and factors for reducing costs in communications organizations.

Under sources cost reduction refers to those elements or cost items the amount of which must be reduced in order to reduce cost, under factors the measures that need to be taken to achieve this are understood.

The main sources of cost reduction are:

1) increasing labor productivity, resulting in a reduction in the number of employees and the wage fund;

2) reducing the costs of materials, raw materials, fuel per unit of production;

3) reduction of maintenance costs, production management;

4) improving the use of equipment;

5) acceleration of turnover of working capital.

Cost reduction factors:

1) In-production, depending on the activities of the enterprise itself:

a) technical, aimed at improving the technical level of production;

b) organizational, aimed at improving the organization of production and labor, changing the management structure;

c) structural, aimed at changing the structure and volume of production;

2) Non-production, the change of which does not depend on the activities of the enterprise:

a) established depreciation rates;

b) changes in prices for raw materials received from suppliers;

c) changes in the tariff system and the established minimum wage;

d) changes in tax rates and contributions to the budget and extra-budgetary funds.

Let's determine the annual savings from cost reduction for the year using the formula:

Eug = (C1 - C2) * Br, (32)

where C1 and C2 are the cost per unit of production, respectively, before and after the implementation of measures, rub. /PC.;

Вг - planned annual production volume of products after the implementation of measures, natural units of measurement, tons.

Annual savings are calculated separately for meat and fish products and then added up.

Meat shop:

The planned annual production volume after the events is 180 tons.

Apple= (99.7-88.97) *180=1931.4 thousand rubles

Fish shop:

The planned annual production volume after the measures taken is 42 tons.

Apple= (69.31-60.80) *42=357.42 thousand rubles

Total savings per year:

1931.4+357.42=2288.82 thousand rubles.

By reducing production costs, in addition to increasing profits, savings of 2,288.82 thousand rubles are expected.

Loan calculation

To implement the proposed measures, the company needs additional funds in the amount of 995.39 tr. At this time, the company does not have sufficient cash reserves to implement the proposed project, so the best option would be to obtain a loan from Sberbank of Russia in the amount of 1 million rubles for a period of 5 years at 10% per annum.

The loan repayment plan is presented in Table 34.

Table 34 - Loan repayment plan

Economic efficiency of project activities

After all the activities carried out, we can conclude that the performance of the enterprise has improved. They are presented in Appendix A and Table 35.

Table 35 - Economic indicators of work after the activities carried out

Thus, after all the measures taken, sales of meat products are expected to increase by 62.3 tons and for fish products by 10.2 tons. The increase in revenue will occur by 6327.2 thousand rubles. for meat products and by 689.46 tr. for fish products. Profits will also increase:

for 2042.58 tr. for meat products

by 339.77 tr. for fish products

The cost of production is expected to decrease:

for the meat shop for 10.73 rubles;

for the fish shop for 8.51 rubles.

Costs such as:

1) Meat shop

for electricity by 14.34 tr. or 10.51%

general production costs by 97.9 or 10.09%

2) Fish shop

wage fund for 42.4 thousand rubles. or by 51.8%

fees from the payroll fund for 8.63 tr. or by 59.9%

electricity consumption by 1.14 tr. or by 5.3%

rent for 1.4 tr. or by 20%

costs for repairs of fixed assets by 11.4 thousand rubles. or by 30.48%

Annual savings from cost reduction will amount to 2288.82 thousand rubles. The measures taken will bring significant economic benefits to the company and, if this project is successful, the opportunity for further development.

Summary table 36 shows the profit that these activities will bring.

Table 36 - Summary table of activities

Thus, having incurred costs in the amount of 995.39 thousand rubles, the company will receive an increase in net profit of 1905.89 thousand rubles, which is 2 times more expenses, which indicates the effectiveness of the measures taken. Profitability will increase: for the meat shop by These indicators indicate that if profit indicators continue to remain at a high level, then the enterprise, in addition to possible further development and expansion, will have the opportunity to repay the loan they took out ahead of schedule.