Top Five Reasons Why You Can’t Find Opportunities to Reduce Costs

Top Five Reasons Why You Can’t Find Opportunities to Reduce Costs

As global trades have made it very competitive, there is a lot of emphasis on cost reduction. Many companies struggle to find ways to cut costs and remain competitive. Here are some tips:

  • You don’t believe that cost reduction can be achieved. You may be setting up barriers to lower costs. You can change your mindset to say, “I must reduce costs by 20% regardless of what,” and then give yourself enough time to do so. Everyone would be able to reduce costs by 20% if it were easy.
  • The goal is to keep the product’s design as close as possible. You shouldn’t assume the current design is perfect. Every decision, starting with product specifications, should be challenged. Take a look at your competition. Everyone does things differently, but someone does it the best. This is a sign that there are many solutions to a problem. Functional Analysis is a good option.
  • It is difficult to understand the cost drivers for your parts. It is crucial to talk with suppliers and get cost breakdowns. Also, analyze the cost drivers. To know where to focus, you need to understand the cost of raw material, manufacturing, or other costs. If the material cost is small, don’t be tempted to reduce the wall thickness or use a different material.
  • To reduce costs, you rely on brainstorming. It is simple to set up brainstorming and you can tell your boss that you have looked into ways to cut costs. But brainstorming is not enough. Brainstorming sessions can be too open-ended and unfocused. It is important that you focus your efforts on the areas where the cost is: parts with the highest spending, largest categories of parts, and the cost drivers ,…
  • Fear of downgrading your parts’ performances


To downgrade the specifications of a part, the product must go through performance simulations, testing and quality inspections. It can be frightening to see the unknown results. But, the cost of performances is usually aligned with their cost. The cost of the performance can be reduced by reducing them. This is a common approach that is often avoided due to “there might be, whom knows some issues”, but it can often result in substantial cost savings. Changes are not to be afraid of, they are necessary. Make changes before your competitors do.


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