Effective Process Control When Implementing Cost Reduction Projects

Business projects can be a source of headaches for those in charge of them. They're pulled off exceptionally well, or they crash and burn. If you prepare yourself for the challenges ahead, you can complete the project unscathed, with your sanity intact and still like your colleagues.   

Cost reduction projects have numerous variables that need to be taken control of. One of the most important variables to monitor is the various processes of how things are accomplished. If processes are carefully monitored or changed for the better, your superiors will applaud your efforts.  

Process Controls to Monitor 

1. Identify Project Costs: When spearheading a cost reduction project, you need to have a well thought out game plan. This game plan would have gone through a planning stage when everything would have been taken into consideration. In this planning phase, the project manager should correctly identify costs of the project. The planning process does have some guesswork embedded in it. You're betting your qualified team canget the work accomplished within specific cost parameters. Accurately identifying costs will help you stay in those parameters and avoid hidden costs that may unexpectedly pop up in the middle of your project. When identifying expenses, you need to include the scope of the work, the schedule of the project, your human resource plan, and any environmental factors that would put your budget off course. Identifying all these costs, and planning for them, will ensure you don't begin your project with your eyes closed. Once your project is underway, it’s helpful to watch your monthly costs in separate cost accounts. By doing so, you know exactly how much is coming out and for what purpose, decreasing overspending.
2. Check Your Inventory: Another area to look at to achieve effective process control is your inventory. Inventory can arrive accidently damaged from the supplier, it can be damaged when employees handle it, or it could get lost—that’s not uncommon. However, you can mitigate these loses by changing handling and receiving processes. To determine if these changes are working, see if your damages have decreased and review your shrink/loss numbers. If you see a decrease, you’ve effectively controlled the process. Controlling processes related to inventory is important because you can potentially lose a lot of money when the product is not sellable.   
3. Deliveries: You can also monitor data from deliveries to determine if your current processes are effective. Deliveries can account for a lot of waste in your supply chain when they’re delayed. Review the data to see what your on-time delivery percentage is. Here you’re looking for a high number. If your number is low, you have some changes to implement to make your delivery process more effective.  

Related: You’ve Optimized Your Process and Streamlined Your Operation. So Now What?

Cost reduction projects don't have to be a nightmare. If your processes are effective to begin with, you’ll have little else to do to decrease your costs. If you correctly identify your project costs, manage your inventory, and deliver your products on time, your project game plan will be top notch.   

Watch our educational recorded webinar on supply chain cost reduction.