Does anyone has a great idea for establish cost reduction approach for business?

Please guide me for implement it. Thank you.

Panuphan

Assuming you are wanting to identify opportunities for reducing your maintenance costs then i suggest you do a pareto analysis of the cost of maintenance on your items of plant and equipment to find out what the highest maintenance cost items are eg top 10 , then analyse the maintenance and repair history or each of these individually using FMEA principles to identify opportunities to improve component reliability , which should also represent significant cost reduction opportunities and will also give your production dept increased productive capacity

Dear Trevors,

Thank you for suggestion. Those approach are in place in our maintenance but not sure effective or not. In addition to your suggested, when you think business down (profit and margin), all employees entire organization should to cut cost unnecessary. So, I need to establish cost reduction plan to propose our management.

Panuphan

First a word of warning about a focus on cost cutting.
You need to be very carefull to make sure that any cost reduction opportunities you identify only relate to "unnecessary" maintenance costs, you should not attempt to reduce essential maintenance costs particularly the costs associated with your preventive maintenance programme by either not doing the work or deferring it .
If you do cut out preventive maintenance work it will end up costing you much more in corrective maintenance costs plus the cost of lost production.

You might achieve cost reductions by :-
(a)looking at the cost of spare parts to see if you can negotiate a cheaper price and
(b) looking at reducing your use of contractors by getting your own employees to do the contractor work in addition to their own work.

Also you could do a cost benefit analysis of the preventive maintenance work you currently do to identify any situations where it would be more cost effective to adopt a RTF strategy than a PM or Inspection strategy in other words to identify where you are over maintaining equipment

However i still think that your biggest cost reduction opportunity would be to reduce the amount of breakdown work you do, by focussing your efforts on improving reliability of your equipment with the highest repair costs.

You mentioned that you have a reliability improvement process in place but not sure of its effectiveness ,The simple way of determining whether it is effective is to put in place a review process that checks to see if the reliability improvement solutions that you have implemented have been successfull in terms of either eliminating the failure mode completely or reducing its frequency .
If they are successful you will see a corresponding drop in maintenance costs which you should be able to relate to the reliability improvement solution.

Panuphan, may we know what is your unit production cost compared to international market prices? Are you above or below it? If you are above, then maybe something need to be improved. However, your cost could be above if the gas supply is priced above the international price, etc. So please tell us what constitues your unit production cost.

Also what is your plant capacity, is it small or large? If smallscale, your cost could be higher because of lacking mass production.

What is the cost of electricity, water, chemicals in Thailand compared to international price?

Is the plant highly automated or labour intensively? Is the process technology proven?

quote:

Originally posted by Josh:
Panuphan, may we know what is your unit production cost compared to international market prices? Are you above or below it? If you are above, then maybe something need to be improved. However, your cost could be above if the gas supply is priced above the international price, etc. So please tell us what constitues your unit production cost.

Also what is your plant capacity, is it small or large? If smallscale, your cost could be higher because of lacking mass production.

What is the cost of electricity, water, chemicals in Thailand compared to international price?

Is the plant highly automated or labour intensively? Is the process technology proven?

Josh, some question I really don't know but I fill find out the answer for you. Now, I know Feed price are increases depend on Oil price.

Previous, we have margin above 1 million USD but a recent month to remain 0.3 million USD per day. CEO announced to all employee help to un-necessary cut cost.

For me, I'm in maintenance organization. I think too much how to reduce un-necessary cost in term of maintenance.

I knew, we can not cut PM cost but we can optimum it.

Ah, maybe your maintenance training budget will be cut, if there are so much unnecessary costs!

I guess we should look at the bigger picture than that.

quote:

Originally posted by AromaticsThailand:

quote:

Originally posted by Josh:
Panuphan, may we know what is your unit production cost compared to international market prices? Are you above or below it? If you are above, then maybe something need to be improved. However, your cost could be above if the gas supply is priced above the international price, etc. So please tell us what constitues your unit production cost.

Also what is your plant capacity, is it small or large? If smallscale, your cost could be higher because of lacking mass production.

What is the cost of electricity, water, chemicals in Thailand compared to international price?

Is the plant highly automated or labour intensively? Is the process technology proven?

Josh, some question I really don't know but I fill find out the answer for you. Now, I know Feed price are increases depend on Oil price.

Previous, we have margin above 1 million USD but a recent month to remain 0.3 million USD per day. CEO announced to all employee help to un-necessary cut cost.

For me, I'm in maintenance organization. I think too much how to reduce un-necessary cost in term of maintenance.

I knew, we can not cut PM cost but we can optimum it.

Panuphan,
What is your PM Cost as a %age of your total maintenance cost ?

Panuphan,
There is a four part series of articles on cost reduction and how to do it successfully on my website http://www.InitiateAction.com/articles.htm.
Go about halfway down the page and you will see them.
If these raise qustions about execution I am happy to repsond to those via this forum.

Regards,

Hi Phillip,

Thank you for your suggest. As per your link, you mention only inventory cost reduction that I know it make more outcome in an organization.

I would like to tell you something, I have some confict with Inventory department.