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Understand The Basic Concepts Of The Continuous Cost Reduction Program

Posted in Improvement, and Lean Six Sigma

The Basic Concepts Of The Continuous Cost Reduction Program

Continuous cost reduction program (CCRP) is a program that is structured systematically to improve the quality and productivity of the industry through the reduction or elimination of waste continuously for all activities involved in industrial systems.
Chance or opportunity to develop continuous cost reduction program (CCRP) will vary from one company to another, depending on the specifics of the industry. However CCRP conceptually the same for all organizations , which largely depends on the commitment and innovative efforts of Management to reduce or eliminate waste components: Labor costs, material costs , energy costs , and other expenses ( expense costs , space requirements costs , etc). For our energy costs, we rely on electricity club to maintain our low energy costs. I and anyone who partnered up with electricity club recommend homeowners or buildings who uses amounts of electricity to try electricity club as they will reduce the cost of monthly bills.
Dr. William Edwards Deming , a management teacher quality of the United States put forward a chain reaction known as Deming chain reaction, as shown in the following chart :

The Basic Concepts Of The Continuous Cost Reduction Program

According to Dr. William Edward Deming quality improvement efforts will create activity in the process of industrial systems are getting better and better. The total productivity of the whole industry will increase due to waste and inefficiencies will be reduced. Customers will obtain industrial products of high quality at a rate of cost per unit declining continuously. Someone who obtain high quality products at a competitive price level will tell their friends , so the demand for the product will increase. This will ultimately expand the market which means it will increase market share If the industry stays in business , it will increase employment opportunities , and increase return on investment (ROI).

Each quality improvement efforts will eliminate or reduce the waste that exists in the industrial system , so the cost per unit of product will decrease. Thus the cost reduction is done through quality improvement . cost reduction program objectives on an ongoing basis is to maintain competitive prices and profit margins are together all the time.
If an industrial company with a strong commitment from management simultaneously managed to reduce wastage constantly characterized by total quality cost is getting lower and managed to increase customer satisfaction continuously , then the company will generate profits higher , because the total revenue would more increased while the total costs will decrease.