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Operational Cost Reduction

Question

Vanakam Sir,

I have been following up your business series in iTimes.my. I would also like to get some advice from you sir. I am running a very small magazine publication. Things are going well but still my monthly turnover is not to the satisfaction. At times I still have to do some rolling here and there. Can you please advice me how to go through my business without a rolling process? Thank You Sir.

Rajenthiran, Petaling Jaya

So many business people focus on their income generating and of course they are making good sum of it. But there is a very petty thing most of us fail to realise at times. This happens a lot in our Indian businesses normally. We concentrate so much in money making but we fail to monitor our operational cost.

First, you have to find a way to reduce your operational cost. Operational cost includes utility bills, phone bills, staff wages, stationaries and so on. For example, I believe as a publication company, your production will sure be going overnight. So your electricity cost is double the amount. Now lets say you can get it done all in just 1 shift, so you will be saving your electricity cost there. So, This is how you can save the cost.

Assigning a team of employees to analyze an expense category can identify areas of expense reduction. Employees can often identify items with less expensive alternatives that will meet the needs of the organization. Sometimes, items are identified that can be eliminated entirely without affecting the organization. Rewards for participation in the effort to reduce expenses can include financial and other incentives but recognition of their achievement should also be motivational.

An analysis of the existing base of suppliers could also reveal opportunities for reducing costs by consolidating purchases for additional buying power. Consolidation of suppliers will also produce a reduction of administrative expenses due to processing fewer purchase orders, invoices and payments. Additionally, try negotiating with current suppliers for better pricing and consider proposals from alternative suppliers to lower costs in all operating expenses areas including the small expenses.

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