Cost Reduction/Awareness/Effectiveness – Suggestion KPI ( Part 3 of 4)

This third part relates to some suggestions on KPIs that can be established when a company is conducting a cost awareness or effectiveness exercise.

Some suggestions are:

1.Targeted Cost Reduction

• Each department tasked with identified suppliers/costs and % Y-O-Y tasked to reduce
• Key Performance (Cost) Indicators (KPI)
• Periodic Tracking and Review 

2.Leverage on commonalization of suppliers base

• Target 2/3 suppliers for common products and services

3.Return on Investment (ROI) on all cost outlay

• Cost Trade-Off Analysis
• Whether it is a profitable option
• ROI Impact Analysis

4. Propagate to All Operating Managers On spending “constructively or effectively”

• Have the mindset right by asking what if the money is yours and how would you like to spend it effectively?

5. Reward Achievers

• Yearly Bonus Matrix (With Achievement Multiplier Factor)

• Steps/Procedures In A Costs Awareness/Effectiveness Exercise ( Part 2 of 4)
• What is Cost Effectiveness ( Part 1 of 4)
• Advantages and Disadvantages of Using Economic Value-Added (EVA) As Performance Indicator or KPI
• Short Term Decision Making:Other Relevant Cost Techniques(Part2)