When Cost Cutting Becomes the Focus

[GStocker]

Media coverage of industrial accidents and product recalls often point to arbitrary cost-cutting as the cause of the problem and make it appear that such practices are limited to the companies involved.

Read more at: http://corporatedeathspiral.blogspot...mes-focus.html

[bradintx]

That is a pretty darn good article. The issue that will happen is that an organization might start on the right track with looking to improve value or eliminate non-value activities. At some point this can get pushed in a cost cutting mode, I'd like to place all the blame on some Harvard MBA types, but that is not fair.

Almost as often a company can just start cost cutting from a knee jerk reaction to the current ecomonic situtation and not look at value at all (this is a company that is bound to eventually fail anyway so in the interest of culling the herd I am in favor of letting them die sooner rather than later).

All companies must keep in mind that cutting is a very finite method. YOu can only cut to zero. For every dollar or every hour of effort that is put into cutting or better value improvement, and equal effort should be put into growth. Growth is pratically infinite in potential.

[Be Ware]

Good points bradintx however, I disagree we should link cost cutting and better value improvement as you do in your last paragraph.

Aren't you implying there is a limit to improvement, just like you can only cost to zero?

The ideal state for processes to create the highest quality with lowest cost in shortest lead time (zero defects, 100% value add, Single Piece in sequence on demand, security for the worker) is theoretically unachievable and provides infinite opportunity for improvement and adaptation.

Thus better value improvement and growth are the two things a company should strive for over blind cost cutting.

[bradintx]

Be Ware - thanks for pointing out that my thought was not well communicated. It is cost cutting that is finite, improving value and growth are NOT finite.

I will consider this a blogging continuous improvement for the day!