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Cost-cutting
Cost reduction is the process used by organisations aiming to reduce their costs and increase their profits, or to accommodate reduced income. Depending on a company’s services or products, the strategies can vary. Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the final cost of a project such as an engineering project or the construction of a building. In the public sector, cost reduction programs can be used where income is reduced or to reduce debt levels. Importance Companies typically launch a new product without focusing too much on cost. Cost becomes more important when competition increases and PRICE becomes a differentiator in the market. The importance of cost reduction in relation to other strategic business goals is often debated. Examples of cost reduction strategies and programmes Commercial businesses Consultants Deloitte reported in 2006 that over three-quarters of the FTSE 100 listed ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Value Engineering
Value engineering (VE) is a systematic analysis of the functions of various components and materials to lower the cost of goods, products and services with a tolerable loss of performance or functionality. Value, as defined, is the ratio of function to cost. Value can therefore be manipulated by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements. The term "value management" is sometimes used as a synonym of "value engineering", and both promote the planning and delivery of projects with improved performance. The reasoning behind value engineering is as follows: if marketers expect a product to become practically or stylistically obsolete within a specific length of time, they can design it to only last for that specific lifetime. The products could be built with higher-grade components, but with value engineering they are not because thi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Profit (economics)
In economics, profit is the difference between revenue that an economic entity has received from its outputs and total costs of its inputs, also known as surplus value. It is equal to total revenue minus total cost, including both Explicit cost, explicit and implicit cost, implicit costs. It is different from accounting profit, which only relates to the explicit costs that appear on a firm's financial statements. An accountant measures the firm's accounting profit as the firm's total revenue minus only the firm's explicit costs. An Economists, economist includes all costs, both explicit and implicit costs, when analyzing a firm. Therefore, economic profit is smaller than accounting profit. ''Normal profit'' is often viewed in conjunction with economic profit. Normal profits in business refer to a situation where a company generates revenue that is equal to the total costs incurred in its operation, thus allowing it to remain operational in a competitive industry. It is the mi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Product Development
New product development (NPD) or product development in business and engineering covers the complete process of launching a new product to the market. Product development also includes the renewal of an existing product and introducing a product into a new market. A central aspect of NPD is product design. New product development is the realization of a market opportunity by making a product available for purchase. The products developed by an commercial organisation provide the means to generate income. Many technology-intensive organisations exploit technological innovation in a rapidly changing consumer market. A product can be a tangible asset or intangible. A service or user experience is intangible. In law, sometimes services and other processes are distinguished from "products". NPD requires an understanding of customer needs and wants, the competitive environment, and the nature of the market. Cost, time, and quality are the main variables that drive customer needs. Ai ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Value Analysis
Value engineering (VE) is a systematic analysis of the functions of various components and materials to lower the cost of goods, products and services with a tolerable loss of performance or functionality. Value, as defined, is the ratio of function to cost. Value can therefore be manipulated by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements. The term "value management" is sometimes used as a synonym of "value engineering", and both promote the planning and delivery of projects with improved performance. The reasoning behind value engineering is as follows: if marketers expect a product to become practically or stylistically obsolete within a specific length of time, they can design it to only last for that specific lifetime. The products could be built with higher-grade components, but with value engineering they are not because thi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Cost Driver
A cost driver is a structural factor which determines the cost of an activity or a change in its cost. The Chartered Institute of Management Accountants defines a cost driver as: although a different meaning is assigned to the term by the business writer Michael Porter, who states: Approaches Porter's approach defines a "cost driver" not just as a simple ''variable in a function'', but as something that ''changes the function'' itself. For example, the driver "economy of scale" leads to different costs per unit for different scales of operation (a small cargo vessel is more expensive per unit than a large bulk carrier), and the driver "capacity utilisation" leads to greater costs per unit if the capacity is under-utilised and lower costs per unit is the utilisation is high. In general, the cost driver for short term indirect variable costs may be the volume of output/activity; but for long term indirect variable costs, the cost drivers will not be related to volume of output/acti ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Design For Manufacture
Design for manufacturability (also sometimes known as design for manufacturing or DFM) is the general engineering practice of designing products in such a way that they are easy to manufacture. The concept exists in almost all engineering disciplines, but the implementation differs widely depending on the manufacturing technology. DFM describes the process of designing or engineering a product in order to facilitate the manufacturing process in order to reduce its manufacturing costs. DFM will allow potential problems to be fixed in the design phase which is the least expensive place to address them. Other factors may affect the manufacturability such as the type of raw material, the form of the raw material, dimensional tolerances, and secondary processing such as finishing. Depending on various types of manufacturing processes there are set guidelines for DFM practices. These DFM guidelines help to precisely define various tolerances, rules and common manufacturing checks relate ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Design For Assembly
Design for assembly (DFA) is a process by which products are designed with ease of assembly in mind. If a product contains fewer parts it will take less time to assemble, thereby reducing assembly costs. In addition, if the parts are provided with features which make it easier to grasp, move, orient and insert them, this will also reduce assembly time and assembly costs. The reduction of the number of parts in an assembly has the added benefit of generally reducing the total cost of parts in the assembly. This is usually where the major cost benefits of the application of design for assembly occur. Approaches Design for assembly can take different forms. In the 1960s and 1970s various rules and recommendations were proposed in order to help designers consider assembly problems during the design process. Many of these rules and recommendations were presented together with practical examples showing how assembly difficulty could be improved. However, it was not until the 1970s that n ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Reverse Costing
Reverse costing describes the process of disassembling (reverse engineering) a device to identify manufacturing technology and calculate its manufacturing cost Manufacturing cost is the sum of costs of all resources consumed in the process of making a product. The manufacturing cost is classified into three categories: direct materials cost, direct labor cost and manufacturing overhead. It is a factor ...s through a cost analysis of its parts and the effort required to assemble them. References Costs {{econ-stub ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Cost
Cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer. Usually, the price also includes a mark-up for profit over the cost of production. More generalized in the field of economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ..., cost is a metric that is totaling up as a result of a process ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Activity-based Costing
Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore, this model assigns more indirect costs ( overhead) into direct costs compared to conventional costing. The UK's Chartered Institute of Management Accountants (CIMA), defines ABC as an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. The Institute of Cost Accountants of India says, ABC systems calculate the costs of individual activities and assign costs to cost objects such as products and services on the basis of the activities undertaken to produce each product or services. It accurately identifies sources of profit and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Overheads
In business, an overhead or overhead expense is an ongoing expense of operating a business. Overheads are the expenditure which cannot be conveniently traced to or identified with any particular revenue unit, unlike operating expenses such as raw material and labor. Overheads cannot be immediately associated with the products or services being offered, and so do not directly generate profits. However, they are still vital to business operations as they provide critical support for the business to carry out profit making activities. One example would be the rent for a factory, which allows workers to manufacture products which can then be sold for a profit. Such expenses are incurred for output generally and not for particular work order; e.g., wages paid to watch and ward staff, heating and lighting expenses of factory, etc. Overheads are an important cost element, alongside direct materials and direct labor. Overheads are often related to accounting concepts such as fixed costs an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
