Corporate cost reduction

Merchandise

Examples of reductions

Do you really need to cut costs? About the meaning and necessity of cost reduction

Recently, [Cost reduction] is often heard. So what exactly is cost cutting? I will tell you about its meaning and necessity.

What is cost reduction?

he meaning of the word is literally "cutting expenses", and synonyms include "cost reduction", "cost reduction", "cost cut" and "rationalization".

Then, what are the “expenses” that must be cut?

for example,

etc...Various expenses apply.

By improving internal systems such as work and management methods, cutting costs such as those listed above is called cost reduction.

Do you really need to cut costs?

For corporate profit improvementIn other words, cost reduction is one of the important measures.

The formula for generating profits is basically "Sales - Expenses = Profit", so to increase profits you must either "Increase sales" or "Reduce expenses".

In order to increase sales, it can be roughly divided into either "increase customers" or "increase unit price", but it often takes time to achieve both.

In addition, it is conceivable that expenses such as personnel expenses and capital investment required to increase sales will increase.

On the other hand, cost reduction can be tackled not only by the sales department but also by the entire company, and if unnecessary expenses can be reduced, profits can be increased naturally.

Reducing expenses rather than increasing them is important in many companies, as there are cases where it is possible to obtain continuous results for improving profits more quickly.