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Cost Reduction with Lean Six Sigma

Posted in Lean Six Sigma

Along with the level of competition and the rapid flow of information , the law regarding the price has changed . If the first equation to determine the price is the cost of production plus a profit that we want . Example , if the cost of production of our products USD 100 and the profits to be taken by 10 % , then the price of our products is USD 100 + 10 % = USD 110 .
Currently , pricing is no longer in the hands of manufacturers , but by the market . So the mathematical equation is the price – cost of production = profit . So , if the price for our product in the market 100 , then we need to push our production costs at least USD 99 , so that the profits of USD 1 . Profit factor that used to be free , now a dependent factor .
In the practice of Lean Six Sigma , a formula for the price and profit – Profit = Cost of Production . This formula is well known in Lean Manufacturing . We have to design processes and products in order to enter into this cost range .
The savings are not the same as cutting costs . Organizations that have a tendency to cut costs and haphazard origins actually jeopardize his own future .
We understand that every process of making the product or service that we offer to customers in definite need of cost . But unfortunately , many of us forget that not all of the customers that we are required to do . These processes result in costs that should be our press . The cost of the customer ‘s unwanted form :