Optimization of production costs. Ways to optimize costs. Do not communicate with the faceless crowd, called the "target audience"

Andrey Chernysh, our expert, head of the consulting department at Key Solutions, answers this topical question for many Belarusian businesses.

First of all, I emphasize that before you start cutting costs, it is better to think a hundred times over increasing the profitability of the business - these can be new offers to existing, loyal customers, the search for new buyers, niches, products. If you have a margin for the price of your goods and services, then during a crisis you can significantly increase sales by lowering prices - after all, everyone is trying to save money.

And only if there are no ways to increase profitability, and a catastrophic drop in sales leaves no other way out, move on to costs.

Diagnostics

Unfortunately, in many companies, dealing with costs begins with jerky layoffs, pay cuts, savings on stationery or office space, when all employees are moved to two rooms, and so on. But it is more correct to start with a calm analysis of the cost structure.

Make a table with the amount of costs for various items, departments, activities and determine their share in the total volume. Then it will be possible to see in which direction it will be possible to achieve the maximum effect.

It’s good if the company’s accounting is set correctly and you can immediately see which division spends the most in which direction. But more often it turns out that way. “We spend a lot on business trips.” But what exactly the money is spent on in the “business trip” article is not clear. For sales or for researching new products? If we see that a large part of the travel budget is for sales, then cutting here will be the worst punishment for ourselves (unless, of course, your products / services cannot be effectively sold via Skype).

Therefore, if the accounting in the company is not very good, then it is better to plant an economist or, in extreme cases, an accountant, and give him a week to allocate costs by type of company activity - and only after that take up optimization.

Converting Fixed Costs to Variables

Everyone knows that fixed costs are those that you incur anyway, while variable costs are those that depend on sales volumes. Therefore, before cutting something, think first of all how to translate "permanent" into variable costs.

For example, wages. In a crisis, they begin to cut it immediately. Instead of thinking about how most payroll variable by introducing KPIs or bonuses. Tell the staff: instead of eight million salaries, you now have five million as a permanent part, and five more as a bonus, which will depend on performance.

4 types of costs and their relationship with the main business process

Costs in the company can be conditionally divided into 4 types.

1. Costs for the main process, which must be carried in order to “nourish” income-generating activities. (If this is production, then this is raw materials, if the store is the cost of renting premises, wages of sellers).

2. Supporting costs play a necessary, but auxiliary role: the salary of accountants, lawyers, etc.

3. Hygiene costs they need to make the company comfortable, pleasant to work, they also ensure the loyalty of the staff: supplying the office with everything necessary, social packages for employees, corporate parties.

4. unproductive costs. This is, roughly speaking, when the car goes loaded in one direction and empty in the other. The warehouse is rented, but not loaded. Or the production process is not optimized, and therefore takes longer than it could.

What costs need to be cut first? That's right, unproductive. But in practice, managers begin to cut hygiene costs first. Why?

Because hygiene costs lie on the surface, and unproductive costs are harder to find.

Stop providing the office with everything you need, cut social packages and cancel corporate parties - this is the easiest thing, but it demotivates the staff.

And in order to find hidden reserves, you need to sit down, draw a process for yourself and understand where important elements. But this takes time and you need to turn on your brains.

So how do you optimize?

It is important to understand that cost optimization methods can be situational and systemic.

Situational - this is an optimization "today for tomorrow" in order to wait out a difficult time. Here you need to think in the following areas:

Negotiate with suppliers to reduce prices. Before that, you need to explore the situation with them as much as possible. Maybe they are in the same difficult situation, they do not want to lose customers and are ready to negotiate.
Optimize personnel costs. In addition to the already indicated increase in the variable part, one can be sent on unpaid leave, transferred to 2/3 of the working week, and is loyal to side jobs. All this, of course, causes dissatisfaction among employees, but it is somewhat smoothed out by the fact that they have more free time.
More active use of cheap technologies. The main core of the team, as well as those whose work is easy to control according to the result, may well work remotely, at home, freeing up offices that are too high for rent (but it should be remembered that this still affects the corporate culture and the level of control badly). Fewer business trips - more video conferences. Well, and so on.

More useful, although more difficult to perform, not situational, but system optimization. Its results remain after the crisis and improve the business model. The company is really coming out of a difficult situation sporty, lean, without the unnecessary "fat" with which it entered this crisis.

These ways are business process optimization, lean production, the introduction of stricter rationing in companies, and budgeting.

For those articles that used to be "rubber", you can normalize a tight budget.

Remembering old Ford, you can carefully calculate how much time is worth spending on various operations (both in production and in the office).

I know a case when in a warehouse logistics company they measured how much time was spent on various operations. At the same time, people were told that a check was underway and that they needed to work as well as possible. And then the obtained values were established as the norm for calculating the number of personnel. The result is a 30% reduction in personnel costs.

AT hard times you also need to understand the structure of assets, for example, to calculate what is better - to own or rent a property. In a falling market, if there is cash and there is confidence that the company will survive the crisis, it is good to buy something “long”.

Cooperation. If companies do not compete with each other, they can share, for example, a car park, office space, and thus reduce their costs. You can also cooperate for joint purchases in order to have more weight in negotiations with suppliers.

Unfortunately, the level of trust between our companies is not yet high enough to cooperate more actively, but there is progress. I know an example when three companies created a joint back office - accounting, legal service, call center, which simultaneously serves three businesses.

Separation of divisions into an independent business(this is closer to the topic of changing the business model). An independent business can be own service logistics, own call center, which provides services to the side. Yes, in general, any department where good specialists work can earn money on professional consultations.

But when separating a division into an independent business unit, it is important to answer 4 questions:

Does the division have its own market?
whether the unit is organizationally ready, or, having started independent activity, it simply will not cope with the management;
whether it can be financially sustainable or will it only pull the “turnover” from the main business;
how it will affect the main process of the main business.

It happens that divisions go on a free voyage and find more profitable niches for themselves than servicing the main process. And it can destroy the core business.

Concentration strategy

Most experts agree that the current recession is for a long time. This means that many companies that lined up for a growing market and felt great with $50-100 million or more in annual turnover are simply uncompetitive in the current situation. Sometimes it's better to slow down, concentrate and be more flexible.

What can you focus on?

On clients. If you have 200 clients, but the main turnover is 5, and a large staff is required to service the rest, then maybe it’s worth “firing” the clients, and optimizing the staff for a new base?

On products. Commodity matrix for some large enterprises consists of 200-300 and more positions. Such a variety pleases the market, but in production such a scatter breaks the rhythm, in distribution it complicates the work of managers and logisticians, in marketing it requires intense support. But now, perhaps, to concentrate on the most marginal products, automatically removing the associated costs?

Point of sale, lines of business, target markets, etc. You need to understand whether you need to be present in all segments, markets or concentrate resources on the most profitable ones by closing representative offices or transferring them to another format of work (dealers, remote sales, etc.)

Our experience shows that a company with concentration can, having decreased in turnover, earn significantly more profit.

In conclusion, once again I would like to emphasize that it is always more useful to work on income than on costs. Therefore, after reading this material, immediately find and read three more ways to increase sales.

Andrey Chernysh

Head of the consulting department of the Key Solutions company.

Among completed projects: assessment of the economic feasibility of spinning off non-core assets of Belaruskali OJSC, development of strategies for manufacturing and trading companies in Belarus and Russia, development of financial and economic models for large and medium-sized enterprises (including JV LLC Santa-Bremor).

Reducing or optimizing costs

Ways to group costs for optimization

The procedure for compiling and implementing a cost optimization program

When drawing up a budget, each enterprise approves the amount of costs with which it is planned to achieve a certain financial result, i.e., each planned cost has a justification. But if the approved income plan is not fulfilled, the costs are cut, strictly controlling costs, instead of optimizing them.

Cost optimization should not go to the detriment of the interests of the business, but, on the contrary, is designed to help the company properly allocate assets in order to direct the released funds for further development. And very rarely, an enterprise has implemented a cost optimization program on an ongoing basis. Let's talk about its advantages, the order of development and implementation.

Ways to group costs to optimize them

Before optimizing costs, it is necessary to study their content.

Grouping costs by structural units

In this case, all expenses are grouped by department. At the same time, both the costs that are directly related to this department and the overhead costs that are allocated to the department according to the established distribution base are indicated.

An example of such a distribution of costs is in Table. one.

Table 1

Distribution of costs by structural divisions

Department/Line item	Department headcount	Average amount monthly expenses, rub.
Personnel Service
Premises for rent
Salary

Mobile services
Internet
Kantovar
Household goods
Fare
General overhead
Legal Department
Premises for rent
Salary

Mobile services
Internet
Kantovar
Household goods
Fare
General overhead

Depending on the scale of the activity, as well as the list of costs, the data table may have a different degree of detail.

This approach to grouping costs is suitable for calculating profit and evaluating the contribution of each division of the enterprise to it, for collecting analytics on the activities of the enterprise. But for optimization, such a grouping is not convenient - the cause-and-effect relationships of the costs and the processes that caused them are not visible. We only see the amount of costs that fall on the structural unit, but do not know how to manage them.

Standard grouping (an example is in Table 2).

Variable costs are those costs, the change of which directly depends on the volume of production or sales volume (material costs, labor costs of production or commercial personnel).

Fixed costs do not depend on the volume of production or sales. Even if these indicators are zero, the enterprise will still have fixed costs - rent of premises, depreciation, communication services, etc.

This grouping is more convenient for the optimization process, but it also does not provide accurate information on which costs should be optimized. On the basis of such a grouping, a plan-fact analysis of costs is usually carried out in order to compare their changes with changes in the volume of production or sales, a break-even point is calculated in order to correctly determine the selling price for products to obtain the planned profit.

If the share of fixed costs has increased significantly in relation to the volume of production, it is necessary to redistribute all possible costs from the category of fixed to variable. This will allow you to manage the size of a significant part of the costs, controlling the volume of production and revenue.

table 2

Grouping costs into fixed and variable

Indicators	Plan 2017		Fact 2017		Deviation, rub.	Deviation, %
Indicators	Total, rub.	Percentage of turnover	Total, rub.	Percentage of turnover	Deviation, rub.	Deviation, %

fixed costs
variable costs
Conditionally fixed costs
Conditionally variable costs
Total costs

Distribution of costs by processes in which they are involved

In this case, the costs are correlated with the processes that caused them. This grouping resembles the income statement form, as it also breaks down costs:

for costs included in the cost of production;
production costs;
general business expenses;
overhead costs;
financial costs, only the basis is grouping according to homogeneous functions.

E. I. Polevaya,
Head of Financial Department

The material is published in part. You can read it in full in the magazine.

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It is quite logical that in the conditions of economic instability, companies want to "be afloat", for which they use various methods to reduce costs. This issue does not tolerate hasty decisions and amateurish approach. Therefore, a lot depends on which methods are used in the enterprise, and what you want to save on.

How to start reducing costs in any business

Start by classifying the costs of the enterprise into the following categories:

Efficiency.

The costs associated with the manufacture of products that will subsequently be sold are considered effective. Inefficient costs include all types of losses: damage, marriage, theft, downtime, and others. Inefficient costs should be kept to a minimum.

Relevance.

The manager must control the dependence of planning on the decisions he makes. Costs that depend on managerial decisions are considered relevant.

If the CEO is no longer able to influence the costs by his decision, then they are classified as irrelevant costs (for example, costs that occurred in the past period, which he can no longer influence in any way).

Particular management attention should be given to opportunity costs that are categorized as relevant.

permanence.

Depending on the level of production, there are fixed, non-fixed and mixed costs. One of the main conditions under which it is possible to control fixed costs is their optimization, which, in turn, requires the division of production costs.

To do this, it is important to know that variable costs do not affect fixed volumes of production and are directly proportional to the production level, while mixed costs include both variable and fixed costs.

Impact on cost.

In this category, direct and indirect costs. If the costs relate to a specific type of service or product, then they are considered direct (for example, the cost of acquiring materials, paying wages production department employees).

The rest of the costs that are not directly related to a specific product are called indirect (for example, the costs associated with the implementation of management and maintenance of the administrative apparatus). If the enterprise produces only one product, then all its costs incurred in connection with the manufacture and sale are considered direct.

Now you must identify the costs to be adjusted and make a plan to reduce them by applying certain cost reduction methods.

After conducting an analysis of the work of many enterprises, we came to the conclusion that, as a rule, the costs of production, personnel, quality and advertising are reduced.

Methods to reduce production costs

Method number 1. Reduced production costs

Warehouse logistics

Quite often, it is in the warehouse that there are reserves that can be used to reduce production costs. For example, often quality control of raw materials is carried out using outdated (in every sense) equipment. This leads to the fact that the received raw materials do not meet the technological requirements.

In this case, the disruption of the production process is inevitable, as both the volume of raw materials used and energy costs increase. By upgrading the equipment, you will not only reduce production costs, but also get the opportunity to work more efficiently with suppliers.

It happens that production costs increase due to insufficient number of warehouse workers. Suppose that wagons with raw materials arrived, which must be unloaded at a strictly allotted time in order to meet them, they simply were not weighed.

And, as a result, another check shows that the underweight of raw materials is almost 10%, of course, that the supplier is to blame. Conclusion: the enterprise will spend less on the wages of warehouse workers than it will lose on the underweight of raw materials.

It happens that raw materials are stored in improper conditions, (under open sky etc.). This is fraught with the fact that it loses its properties, and violations of technology can no longer be avoided. Not only the volume of consumed raw materials is increasing, but also other resources, in particular, electricity. In addition, it is possible that such a violation will adversely affect the quality of the product.

Transport logistics

Cost reduction methods in the enterprise include working to improve the efficiency of using Vehicle. Often, movement, both within the enterprise and outside it (deliveries of raw materials or finished goods), is organized very unsatisfactorily.

For example, an enterprise has established work with customers by setting a minimum sales volume, but has not considered the issue of the volume of deliveries, although this greatly affects the income from the entire order.

Difficulties associated with the inefficient movement of raw materials relate to internal logistics. For example, repeated unloading and transportation of raw materials: unloaded - carried out input control- loaded - transported - unloaded - prepared for production - loaded - transported to the workshop.

Pretty long chain, right? The result of such manipulations is the company's costs incurred as a result of repeated loading and transportation.

Many companies have used seemingly dubious methods to reduce transportation costs. For example, at one enterprise, drivers calmly went to lunch in working cars. No one even thought that this was an expensive pleasure (transport, as a rule, is freight), of course, transportation costs were huge.

The management solved this problem by buying a minibus, which they began to take employees to lunch. Bottom line: transport costs have dropped significantly.

Purchasing actions

It has not been possible to automate procurement-related activities, despite the fact that the tendering procedure is carried out at a fairly high level. Corruption alone cannot be blamed for this, often the problem lies in the improper organization of the process.

You may be able to apply some cost-cutting techniques if you rethink your purchasing approach. What can be corrected? For example, the following:

Elimination of redundant formalization.

Sometimes well-established procurement control does not give the desired result. This is because the job of the entire purchasing department is to collect data and complete documentation. Although, the employees of the department should be engaged in the search for "profitable" suppliers and the conclusion of contracts.

Serious companies arrange tender meetings when they have more than 15 proposals. Naturally, procurement staff spend a lot of time analyzing proposals and preparing the necessary documents. But the detailed development of all purchases takes a lot of time, and it is often not enough.

Not all purchases can be subjected to detailed analysis.

The main thing is to establish priority suppliers, since it is they who are able to provide the bulk of raw materials or materials on mutually beneficial terms. Finding a supplier that will become a “fallback” will relieve the company of risks.

By arranging a tender, you can identify profitable suppliers and discuss the terms of cooperation with them, as well as decide who it is better for the company not to contact with whom.

Increasing the level of interaction between the purchasing department and the production and technical division.

An established tandem "purchase - production" can significantly reduce costs: apply certain methods to reduce costs, make specific proposals for changes in production indicators and requirements for raw materials.

These proposals can be applied when drawing up a work plan for the enterprise, when choosing suppliers. Also, the mutual coordination of the actions of these services will help to choose a supplier whose products most successfully combine the requirements set by the company for price and quality.

Independent evaluation of the existing terms of cooperation with suppliers and search for new supply channels.

An independent company can help analyze the current market situation and find potential suppliers. At the first stages, in order to prepare the most complete list of new possible suppliers and to identify the proposed prices and terms of delivery, an open source analysis is carried out.

Based on the results of the analysis, the management of the enterprise will be able to expand the scope of the tender campaign. An independent evaluation, for example, may show that there are firms from which similar material can be obtained much cheaper than it was done before.

Production

Considering that many companies are reducing the number of investment projects(or abandon them altogether), then cost reduction techniques can be recommended to help focus on areas that can reduce production costs. For example,

Lean manufacturing method.

Provide detailed explanations regarding this method just pointless. The only thing I would like to pay attention to is its effectiveness (although it takes a lot of time to get a noticeable result).

That this process stretches over long time, easy to explain: it is to change the culture of employees during the implementation of production work.

Efficient accounting and control of the expenditure of material assets, stocks and industrial waste.

This method provides for cost reduction through the efficient use of all production resources. As a rule, Russian enterprises almost do not keep records of waste, and, of course, their use is not controlled.

Although sometimes the cost of waste can be much higher than the cost of the product itself, and if it is recycled a little, then the waste will turn into a sought-after product.

Submit your application

Method #2. Reducing management costs

Management costs are usually classified as fixed. Moreover, most of them are direct expenses (bonuses and other payments to employees). Many cost reduction methods involve revising these particular cost items, as they are a key factor affecting management costs.

Reducing costs without cutting staff

For most companies, reducing costs without reducing the number of employees is perfect option optimization of costs, as it contributes to team building, prevents personnel leakage and increases corporate culture. But, unfortunately, the effectiveness of this approach is short-term.

Typically, downsizing has the following goals:

reduce administrative, transport and travel expenses, as well as the cost of renting premises;
cut wages and health insurance costs;
rethink the structure of the working day.

Adjustment of the organizational structure

The organizational structure of many companies in Russia is far from perfect, so the use this instrument downsizing is sometimes just necessary. Conventionally, the modern organizational structure can be divided into two levels, located above ("flat structure") and below ("narrow structure").

The essence of the "flat structure" in the subordination of a large number of employees to CEO(as a rule, it is 7-10 people, and it happens that their number reaches 15).

If the management has up to three superiors, then this is a “narrow structure”. Such an organization can lead to problems between functional units (for example, between project managers and bosses).

In order for a company to function fully in a crisis period, it needs a “flat structure” from below. Cost reduction methods provide three ways to solve this problem:

Expand structural divisions by combining several departments (you can limit yourself, for example, to two).
Shorten the intermediate levels of guidance (for example, introduce new order subordination of heads of departments: remove departments, leaving one representative of the directorate).
Define required amount positions and divisions (as an option, you can leave no more than nine people in the department, and each department can be represented by three departments, consisting of four departments).

By reducing the levels of management and expanding the structural units, you can save a lot of money that was intended for the maintenance of middle managers. Such an adjustment will have little effect on the functional responsibilities of the remaining bosses, in addition, you will not need to reduce the staff.

For example, a company that manages one large holding company has been able to reduce employee costs by $1.5 million a year by expanding organizational units and reducing levels of intermediate management.

Functional optimization

Cost reduction methods provide for several areas of function reductions and their redistribution:

Reducing the volume of reporting documentation, sources of processed data and the level of detail.

Often managers have to process a large number of voluminous and poorly structured reports. If the level of detail is made lower, then the amount of work will also decrease (by 20-30%). This will improve the efficiency of managerial decision-making.

Redistribution of functions between permanent structural units, working groups and collegiate management bodies.

We know of a company that chose this area of functional optimization: its management decided to liquidate the division that was engaged in the integration and restructuring of assets.

These responsibilities were assigned to a working group, which included representatives of various departments, which allowed the company to significantly reduce its costs.

Distribution of functions between service centers and their outsourcing.

A third party company may, for example, provide administration and IT support services. Today it is quite profitable, since such companies offer their services at quite reasonable price trying to expand the customer base.

Methods to reduce the cost of product quality - myth or reality?!

In fact, the cost of quality cannot be avoided, but some cost reduction techniques can bring it down to an acceptable minimum. There are such costs for quality, without which no enterprise can do, and some can be completely eliminated.

The latter include the costs that occur due to the appearance of marriage or some defects. If this is not possible, then try to reduce defects to a minimum, guided by the principle: less defects - less costs.

Avoidable costs are:

leftover materials;
correction or improvement of defects;
the expenditure of additional working time necessary to eliminate the defect, delay;
auxiliary checks and additional control in order to detect defects, the percentage of which is already predetermined;
additional risks related to the fulfillment of the company's obligations (including guarantees);
low sales due to non-compliance with consumer requirements.

Compulsory expenditures are funds used to maintain High Quality products and the minimum level of defect. These costs are necessary as insurance, even with a low percentage of marriage.

Typically, mandatory costs are associated with the following activities:

audit and operation of the quality system;
checking and maintenance of equipment;
evaluation of suppliers;
increasing the level of knowledge of employees on quality issues;
inspection and quality control (to a minimum).

Of course, cost reduction methods involve reducing the cost of quality, but getting rid of them is simply not realistic.

Small Business Cost Reduction Techniques

Not everyone Russian companies are representatives of big business, but the issue of cost reduction is periodically raised in every company. Therefore, we want to offer methods to reduce the costs of business activities for companies belonging to the category of "small" and "medium".

Get out of the office

Today, remote work (at home) is becoming more and more relevant. If you do not use office space for storage of goods, meetings with clients or showcases, then think: “Why do you need it?”. It's possible that you'd be better off giving up the lease.

This approach comes with a number of positives:

cost reduction. Small businesses spend a lot of money on paying utility bills, so by refusing to rent an office, you will significantly reduce costs;
prudent use of time. Instead of wasting time on the road to the office, use it for work;
free schedule. Own working time you plan on your own and reasonable approach, you will be busy not only with the performance of your functional duties, but will also be able to devote time to loved ones and your own development.

Not all employers are sure that without their control the subordinate will perform his duties with high quality and solve the tasks assigned to him. Of course, everything here depends on the employee: an effective employee does not need total control.

For a “painless” transition to remote work, it is necessary to carry out a number of activities: prepare step by step instructions for subordinates, to formulate their goals and objectives. Wages for such employees are charged not for the time spent on work, but for its actual performance.

Enter into negotiations with the landlord

If you still need an office or other space, try to negotiate with the landlord to reduce the rent.

Of course, such a dialogue does not always end as the tenant would like, but positive aspects are still observed. For example, you can hear each other and enter into normal partnerships.

When renting a room, do not leave unused square meters and, perhaps, you will come to the conclusion that you can get by with a smaller area (and this, again, will warn against unnecessary costs).

Don't "hold on" to unprofitable customers

Not all clients can become profitable. Sometimes a client takes so much time, effort and money that the amount received as a result is not able to cover all expenses.

Think: why do you need such a client? Is your cooperation mutually beneficial?

It is more logical to use these funds to attract new customers by offering them interesting loyalty programs, bonuses or additional services.

Sometimes the financial situation of a company may be such that it will be necessary to apply certain methods to reduce costs. New negotiations with suppliers - good way problem solving. Of course, first of all, you need to pay attention to those for whom you are a profitable client and with whom you have been successfully cooperating for a long time.

Contact your supplier for a deferred payment or discount. It is possible that the supplier will not refuse you.

Mutually beneficial cooperation

There are companies that, in order to reduce costs, are exploring new options for business cooperation.

As one option, you can use the joint implementation of various campaigns. For example, if your firms rent neighboring premises or retail space in the same hypermarket, then you can run a joint promotion or share the costs of promoters distributing leaflets on the street.

The ideal option is a combination of businesses that have a thematic connection. For example, salon wedding dresses and a flower shop, travel agency and travel store.

Do not neglect ready-made solutions

It is cheaper for companies that belong to the category of small and medium businesses to use ready-made solutions than to develop something new (of course, if you are not engaged in design or web development).

Enterprises can use the following ready-made business solutions:

accounting software;
products software(analytical or financial orientation);
website development;
a range of services for the organization and implementation of communication programs, etc.

Besides, modern market services even offers the implementation of highly efficient sales systems.

17 methods to reduce personnel costs within the framework of the Labor Code

Do not accept "extra" employees.

Some cost reduction methods are based on elementary mathematical knowledge. Therefore, it is not difficult to calculate that the payroll of eight people occupying the same positions is less than, for example, ten.

If the existing eight employees successfully cope with their duties, then why pay more and fill all the staffing vacancies?

Raise the variable part of wages.

If the company uses time system wages, then it is practically impossible to apply any methods to reduce wage costs, as well as to manage the fund itself. Article 74 Labor Code, it is possible to change the system and the amount of payment only in case of fundamental changes in technological or organizational working conditions.

If you have justification for making such changes, then inform employees about it and implement this program after two months.

If an employee refuses to sign supplementary agreement, which specifies new payment terms and is ready to leave the company, then you pay him a severance pay equal to his earnings for two weeks.

On the basis of the same article, the employer may, for a period not exceeding six months, transfer the company to part-time and/or weekly work.

Enter the summarized accounting of working hours.

Overtime payments do not have to be paid monthly. Article 104 of the Labor Code states that such payments can be made at the end of the reporting period. Cost reduction techniques do not preclude such an approach if production is not at full capacity or is subject to seasonal changes.

Use the system of short-term surcharges and allowances.

If during a certain period of time one of the employees has to perform a larger amount of work, replace an absent employee without releasing him from his main duties, then this, according to Article 151 of the Labor Code, is the basis for increasing the amount of payment.

Accordingly, wages may be reduced if there are no grounds for additional payment.

Pay bonuses only after the company achieves certain goals.

For example, employees receive bonuses if the company has fulfilled the production plan and, conversely, if there is no plan, there are no bonuses. Article 135 of the Labor Code regulates the procedure for paying bonuses, and changes to the payment system are made on the basis of Article 74 of the Labor Code.

Reduce the number of employees or reduce staff.

The reduction of staff is regulated by paragraph 2 of Article 81 of the Labor Code. It would seem that such methods of cost reduction should give an instant effect, but this is far from being the case.

First of all, because the reduction procedure itself must be planned in advance, you need to inform the employees about this no later than two months before the dismissal and pay them a severance pay (2-3 monthly salaries).

Thus, you will “feel” the effectiveness of the method only 4-5 months after you decide to reduce the number of employees (downsizing).

Review labor standards and optimize production processes.

Reducing costs in an enterprise is when in the performance of production plan fewer workers are involved, or they can complete tasks faster.

When applying this method, you must be guided by articles 160 and 74 of the Labor Code, which state the need to notify employees about your plans to revise labor standards and conclude additional labor agreements with them two months in advance.

Sign fixed-term employment contracts.

The grounds for the application of this method are set out in Article 59 of the Labor Code, which also establishes restrictions on its use.

Use outstaffing (rental labor).

The rules for applying this method are set out in chapter 53.1 of the Labor Code. Before using it, you need to weigh the pros and cons and evaluate your benefits.

On the one hand, outstaffing good method reducing management costs: you do not need to select employees and take care of the timely accrual and payment of salaries to them, etc.

But, on the other hand, paying for the services of the company that provided employees, you still spend money on staff.

Take advantage of outsourcing.

Methods to reduce costs involve the purchase of services through the conclusion of an agreement with cleaning companies. For example, by purchasing the "Clean Office" service, you do not need to hire a cleaner.

It is impossible to say right away whether it will be beneficial for your company or not - everything must be calculated. Although, in the budget, personnel costs will definitely decrease.

Sign civil contracts.

It is very good if the performance of work does not go beyond the framework of a civil law contract. In this case, you are not considered an employer, and your relationship with the employee is not covered by the Labor Code.

However, before starting to use such methods of reducing costs, it is necessary to carefully study Article 15 of the Labor Code, which sets out the grounds for entering into civil law relations.

If such an agreement turns out to be illegal, then all your savings will come to naught.

Announce simple.

If the downtime occurred through the fault of the employer, then, according to Article 157 of the Labor Code, the employee receives a salary, the amount of which is not lower than 2/3 of his average monthly salary.

If neither the employer nor the employee is to blame for the downtime, then wages are calculated in proportion to the downtime in the amount of at least 2/3 of the salary (tariff rate).

If an employee is to blame for idle time, then wages are not accrued to him.

Conduct employee appraisals.

In case of inconsistency of the employee with the position held or the duties performed, in accordance with Article 81 of the Labor Code, he may be dismissed. The results of certification are confirmation of his qualifications.

This approach cannot be considered among the most effective methods reducing costs, as it is very labor intensive and selective.

Cancel social payments and compensation.

We mean the complete or partial cancellation of payments provided for by the Labor Code of the Russian Federation.

You, as an employer, have the right to revise payments based on certain regulations, such as travel, meals, accommodation or medical expenses, and financial assistance.

If your collective or employment agreement contains obligations to provide additional payments, then these documents need to be adjusted.

Solely change collective agreement You have no right. But, according to Article 74 of the Labor Code, it is possible to unilaterally amend the employment contract, for example, cancel the travel payment for an employee whose nature of work has been changed (he stopped traveling to resolve production issues).

Manage staff turnover.

There are many factors that contribute to a high level of staff turnover: inappropriate working conditions, hard work or not very convenient schedule, wage system or salary, etc.

The employer is able to take legal measures to regulate the degree of influence of these factors on employee turnover, thus introducing cost reduction methods (and it is difficult to give any recommendations in this matter, everything is very individual here).

Reduce employee training costs.

The hardest part is managing the costs associated with employee training.

When planning a budget for personnel costs, you can go in several ways, for example:

limit the cost of training one employee;
identify priority learning objectives;
conduct training independently;
invite specialists to conduct trainings, etc.

Staff training is a good opportunity to show Creative skills and creative. This topic is so voluminous that it requires a separate publication.

Provide unpaid leave, set a part-time/week schedule.

According to article 128 of the Labor Code, in order to be granted leave without pay, an employee must write an application.

In order to introduce a part-time work regime, it will be necessary, in accordance with Article 93 of the Labor Code, to conclude an additional labor agreement.

Naturally, the desires of the employer and the employee do not always coincide. Therefore, it is necessary to enter into negotiations with employees, during which they are made aware of what can happen if more stringent methods of reducing personnel costs are applied. Usually, decisions made in this way suit both parties.

Summing up, it is worth noting that the choice of method depends only on you, but before making a decision, it is advisable to consult with experienced financiers and lawyers.

Methods to reduce advertising and marketing costs

If you gave at least one affirmative answer, then we can help you optimize your marketing budget by offering the following cost reduction methods.

Do not communicate with the faceless crowd, called the "target audience"

The current level of technology development makes it possible to find out much more about a potential buyer than the banal: “a woman; age: 35-45 years; average income is 100 thousand rubles.

Suppose you have several thousand customers - this is not a reason to appeal to the entire target audience. A potential buyer is very different from the rest: he is interested in purchasing your product or its equivalent. He needs it!

You must find out why he needs it, when this need arose, where he is trying to find him, from whom he asks for advice, why he has not bought it yet, and with what funds the purchase will be made.

First, when you answer questions about the buyer, you can identify their information sources. They may not match the Mass Media you use to inform your target audience.

Place information on the communication channels demanded by your potential customers. Tell them the information included in the context of the purchase.

When addressing a person who is already faced with the task of buying this product or not, you will offer him turnkey solution. It is enough for him to listen to the information once, maximum, twice, in order to remember or write down the information received.

SEO budget and arms race costs are similar

Search engines work on algorithms that rank search results according to the degree to which they satisfy the user's request. Moreover, SEO-optimizers regularly work to "outwit" the search engine, and they regularly update the algorithms. It turns out a vicious circle.

It happens that search engines “take over”, but after some time, SEO-craftsmen again bypass them. If your resource entered the TOP only due to effective SEO optimization, then soon it can be moved “to the backyard” by more competitive resources.

But there is a way out! Fill in the resource demanded by the potential buyer. This can be done, for example, in your blog.

What are cost reduction methods?

Firstly, blogging does not necessarily involve expensive specialists. Not all blogs are run for the sake of making money. As a rule, people are interested in it. And in your company there will be those who like their work and who want to talk about what they do (sell or produce).

Secondly, attracting a professional blogger will cost no more than paying for the services of an SEO optimizer. The only point, find out how well he understands your product (maybe he just beautifully presents the information?).

Thirdly, given that search engines regularly update their algorithms, SEO optimization must be carried out constantly, which entails ongoing costs.

If you publish informative materials, then the resource can “work for you” for many years. You can be sure when you find useful information in "old" articles (published a few years ago).

Memory stores creative advertising

Consider some memorable slogans:

"Let's change the world for the better" . Who and how?
"Sometimes it's better to chew than talk". Of course, chewing gum! And what exactly?
"Impossible is possible" . Did you hear it somewhere? About sport! Or Bilan's song?
"More than fuel" . Seems to be gasoline. Or not about him?

We took slogans that have received worldwide recognition. They were made by the best creatives.

A similar picture is observed in relation to special effects. Today, sneakers can take their owner into space. Effectively - yes, effectively - hardly. The audience knows perfectly well that this is unrealistic, so you should not expect everyone to rush to buy them.

What are cost reduction methods?

For the sake of creativity, give up creativity. Having received answers to questions about customers, you will be able to understand not only “who”, but also “why”, “when” buys your products. It is this information that should be placed in the advertising message. Don't turn means into ends, but use them to achieve those ends.

Does participation in advertising of movie stars, sports or business contribute to its memorization? Of course! Does it affect the buyer's choice? Hardly!

Choosing a reliable bank to which people will trust "their hard-earned money", they will look for sources that inspire confidence. Whom will they believe? An ordinary bank employee who will be their good friend or relative (albeit distant) or a Hollywood star?

It is unlikely that this celebrity keeps money in one of the banks in Russia. It's not even mentioned in the ad. Where does such confidence in its reliability come from?

What cost reduction methods are appropriate here?

For example, famous athlete can star in advertising sneakers if he personally tested them. In other cases, it is better to analyze people who are familiar with your product so that everyone understands: “why” he bought it and “how” it solved his problems. Such information will be more useful than any "famous person".

We have provided you with generalized cost reduction methods. Do not forget that every business is individual, just like its owner. Any company faces specific tasks that are unique to it.

Today, all business representatives are in a difficult position. Most likely, the one who can continue successful activities with minimal production and marketing costs will be able to “stand” and “flourish”.

Inform the consumer about the merits of your product without investing heavily in it. This is the only approach that can be called effective!

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Concentration strategy

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Grouping costs by structural units

Distribution of costs by processes in which they are involved

How to start reducing costs in any business

Methods to reduce production costs

Method number 1. Reduced production costs

Warehouse logistics

Transport logistics

Purchasing actions

Production

Method #2. Reducing management costs

Reducing costs without cutting staff

Adjustment of the organizational structure

Functional optimization

Methods to reduce the cost of product quality - myth or reality?!

Small Business Cost Reduction Techniques

Get out of the office

Enter into negotiations with the landlord

Don't "hold on" to unprofitable customers

Mutually beneficial cooperation

Do not neglect ready-made solutions

17 methods to reduce personnel costs within the framework of the Labor Code

Methods to reduce advertising and marketing costs

Do not communicate with the faceless crowd, called the "target audience"

SEO budget and arms race costs are similar

Memory stores creative advertising

Does participation in advertising of movie stars, sports or business contribute to its memorization? Of course! Does it affect the buyer's choice? Hardly!

Send your good work in the knowledge base is simple. Use the form below

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