Cost Half: The Method for Radical Cost Reduction

Suzue advocates a radical cost reduction method that he terms "Cost Half". "Cost Half" is a set of cost reduction methods, a powerful programme that achieves unprecedented levels of systematic organization. Pursuing the Cost Half approach is not a matter of making small, gradual improvements or piecemeal cost reductions, nor is it a temporary programme of activities. After such programmes are completed, things tend to revert to the way they were before. Instead, the Cost Half programme creates a sleek but strong organization that embodies the idea of maintaining low costs while averting into backsliding after making progress. The Cost Half approach is geared towards achieving two types of cost competitiveness: the ability to improve the bottom line and the ability to maintain strong competitive products or service costs. Because of the need for quick responses to rapid changes in the market or business environment, the best approach is one that seeks to gain both of these abilities at the same time. Since businesses are only as good as the people in them, human resource training is essential when implementing radical cost reduction. Business managers must keep in mind the importance of human resource development in building the desire and will in the workforce to improve cost management. The key work in Cost Half is half. Why half? Because when cost-cutting activities are based on a goal such as a mere 10 or 20 percent reduction in costs, people tend to come with small, incremental cost-cutting ideas and are always conscious of the constraints involved. In other words, their whole approach if geared towards the modest goal of achieving a 10 or 20 percent cost reduction. We cannot revolutionise cost competitiveness by taking such a modest approach. So, the general goal is not modest but radical: cut costs by half. This is an excellent book on how to radically cut costs. Recommended when a company is in serious trouble and needs a turnaround, but once the turnaround is achieved, I would advocate a continuous programme of gradual cost reduction, which does not entail huge disruptions including layoffs of people.