Cost Reduction Analysis: Tools and Strategies(Wiley Corporate F&A)

Discover the tools for knowing the costs your company should cut, without impacting its ability to deliver goods and services New from Steve Bragg, this book provides the tools for determining which costs a company should cut, without impacting its ability to deliver goods and services. It explains how to use throughput analysis in order to locate bottleneck operations in a company, which in turn dictates where capital investments should (and should not) be made. Delves into process analysis, to determine where excess resources are being used in a business process Describes the total cost of ownership, showing how a single purchasing decision actually snowballs into a variety of ancillary costs Shows how to create and use a spend management system to reduce procurement costs Shows how just-in-time systems can be used to eliminate inventory costs Cost Reduction Analysis: Tools and Strategies provides examples to show how much cost can potentially be eliminated to avoid drastic action later that can imperil your corporation's direction and future.

Table of Contents:
About the Author xi Preface xiii Part I Primary Areas of Cost Reduction 1 Chapter 1 The Cost Reduction Process 3 Introduction 3 Need for Cost Reduction 4 Advantages of Cost Reduction 7 Disadvantages of Cost Reduction 8 Cost Reduction Politics 8 Cost Reduction Priorities 9 Cost Reduction Tools 11 Process Analysis 21 Process Analysis Tools 24 Key Cost Reduction Questions 28 Cost Reduction Reports 29 Metrics 34 Summary 34 Chapter 2 Selling and Marketing Cost Reduction 37 Introduction 37 Customer Mix Analysis 37 Customer Class Analysis 39 Sales Region Analysis 39 Dropped Customer Analysis 42 Price Setting with Throughput Analysis 44 Sales Productivity Analysis 46 Sales Effectiveness Analysis 48 Salesperson Analysis 49 Finding Throughput Problems in Sales 51 Sales Process Flow 53 Sales Deduction Systems 55 Collections by the Sales Staff 56 Marketing Cost Reductions 56 Sales and Marketing Metrics 59 Summary 60 Chapter 3 Product Analysis 61 Introduction 61 Target Costing 61 Targeted Price Increases 72 Eliminate Unprofitable Products 73 Add New Products 81 Outsource Products 83 Product Rework Costs 85 Custom Product Costs 86 Product Metrics 88 Summary 90 Chapter 4 Production Cost Reduction 91 Introduction 91 Throughput Analysis 91 Product Line Complexity 92 Production Flow 92 Cellular Manufacturing 93 Continuous Flow 94 Monument Equipment 94 Quick Changeovers 95 Assembly Line Configuration 96 Assembly Line Length 96 Container Sizes 97 Source Inspection 97 Control Chart Analysis 98 Mistake Proofing 101 Expediting 102 Maintenance Planning 102 Machinery Standardization 103 Machinery Assignment 103 Metrics 103 Summary 104 Chapter 5 Payroll Cost Reduction 107 Introduction 107 Analysis for a Workforce Reduction 107 Cost of a Workforce Reduction 117 Alternatives to a Workforce Reduction 120 Manage Payroll Expenses at the Hiring Stage 123 Combat Institutionalized Pay Increases 125 Restructure Commissions 128 Restructure the Workforce 129 Hire Contractors 131 Other Types of Payroll Cost Reduction 132 Worker Adjustment and Retraining Notification Act 133 Payroll Cost Metrics 133 Summary 134 Chapter 6 Benefits Cost Reduction 137 Introduction 137 Benefits Administration 137 Disability Insurance 139 Life Insurance 140 Medical Insurance 140 Pensions 144 Seasonal Bonuses 147 Sick Time 147 Snacks 148 Training 148 Vacation Time 150 Wellness Programs 151 Workers’ Compensation Insurance 151 Miscellaneous Perquisites 153 Free Benefits 153 Metrics 154 Summary 154 Part II Procurement Cost Reduction 157 Chapter 7 Procurement Cost Reduction 159 Introduction 159 Standard Procurement Process Flow 160 Procurement Cards 161 Evaluated Receipts System 164 Additional Procurement Process Flow Changes 168 Supplier Consolidation 171 Supplier Relations 174 Additional Cost Reduction Considerations 177 Metrics 179 Summary 180 Chapter 8 Spend Analysis 181 Introduction 181 Spend Database 181 Spend Analysis 184 Spend Analysis Reports 190 Spend Analysis Rollout 193 Third-Party Spend Management Systems 194 Low-Cost Spend Management Systems 195 Metrics 196 Summary 197 Chapter 9 Maintenance, Repair, and Operations Analysis 199 Introduction 199 Problems with MRO Cost Reduction 199 MRO Cost Reduction Methodology 200 Distributor’s Viewpoint 208 Metrics 209 Summary 209 Part III Asset Reduction 211 Chapter 10 Inventory Analysis 213 Introduction 213 Inventory Purchasing 213 Inventory Receiving 217 Inventory Storage 217 Bill of Materials 221 Obsolete Inventory 222 Miscellaneous Topics 225 Metrics 227 Summary 228 Chapter 11 Fixed Asset Analysis 229 Introduction 229 Fixed Asset Acquisition Analysis 229 Fixed Asset Installation Reporting 235 Postinstallation Audit 237 Outsourcing Alternative 237 Lease versus Buy Decision 238 Feature Reduction Analysis 239 Asset Commoditization 241 Monument Analysis 241 Facility-Specific Considerations 242 Fixed Asset Retention Analysis 243 Fixed Asset Maintenance Analysis 243 Fixed Asset Location Tracking 244 Fixed Asset Condition Tracking 245 Fixed Asset Metrics 245 Summary 247 Part IV Special Topics 249 Chapter 12 Throughput Analysis 251 Introduction 251 Theory of Constraints 251 Operational Aspects of the Theory of Constraints 252 Nature of the Constraint 254 Definitions for the Financial Aspects of the Theory of Constraints 256 Financial Aspects of the Theory of Constraints 257 Opportunity Cost of Operations 259 Locating the Constraint 260 Management of the Constrained Resource 264 Types of Policy Constraints 268 Constraint Buffer 270 Production Scheduling 273 Batch Sizes 278 Capacity Reduction Analysis 279 Work Center Utilization 280 Metrics 280 Summary 282 Chapter 13 Cost Reduction in Mergers and Acquisitions 283 Introduction 283 Integration Timing 283 Integration Planning 284 Synergy Realization 286 Integration Manager 290 Integration Team 291 Integration Communications—Internal 292 Integration Communications—External 293 Employee Integration—Qualification Assessment 294 Employee Integration—Job Positioning 296 Employee Integration—Relocations 297 Employee Integration—Key Employees 297 Layoffs 300 Compensation Integration 301 Sales Integration 302 Process Integration 303 Technology Integration 304 Metrics 305 Integration Pacing 306 Summary 307 Index 309

About the Author :
STEVEN M. BRAGG, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and an auditor at Deloitte & Touche. He received a master's degree in finance from Bentley College, an MBA from Babson College, and a bachelor's degree in economics from the University of Maine. He has been the two-time president of the Colorado Mountain Club, is an avid alpine skier and mountain biker, and is a certified master diver. Mr. Bragg resides in Centennial, Colorado. He is also the author of Accounting Best Practices and Accounting Policies and Procedures Manual, both published by Wiley.