Introduction to Cost Cutter
- A Tactical Action Tool within The Avanulo Way.
- Enables a 7-10% reduction in operating costs within 90 days.
- Achieves Operating Cost Leadership (Cost of Quality 8-10% of revenue) in 36 months.
General Strategy & Tactics
-
Strategy:
Monitor revenue and control spending meticulously. -
Key Tactics:
- Chart of Accounts
- Manual Check book
- The Four Gets of Frugality
- UVS (Universal Value Sheet)
- Quick Hits
- Online Animation System
- Daily Spend Question
- Weekly Procurement Meeting
- Visual Budget Indicators
- Monthly Chart Review
- Eliminate Ineffective ACPs (Automatic Control Points)
Deep Dive into the Tactics
-
Tactic #1: Operate Against a Chart of Accounts
- Structure budget into sub-accounts with clear ownership and goals. ARBO recommended
- Regular meetings for review and updates.
-
Tactic #2: Manual Checkbook
- Tracking of expenses to encourage constant budget awareness.
-
Tactic #3: The Four Gets of Frugality
- Get it for free, Get it for less, Get it later, Get an offset.
-
Tactic #4: Universal Value Sheet (UVS)
- Estimating and teaching costs, with monthly revisions.
-
Tactic #5: Quick Hits
- Identify and implement cost savings under $10,000 quickly. Kalkulisto recommended
Deep Dive into the Tactics
-
Tactic #6: Formal Projects
- Formal Projects using Plan Guard.
- Tactic #7: Onine Project Management
-
Tactic #8: The Daily Spend Question
- Ask the spend question daily at the 1440.
-
Tactic #9: Weekly Procurement meetings
- Weekly Procurement Meetings with structured agendas. Quick hit list recommended
-
Tactic #10: Visual Budget Indicators
- Visual Budget Indicators (Green, Yellow, Red)
- Tactic #11: Monthly Chart Review
-
Tactic #12: Eliminate ACPs
- ACPs are outdated policies, contracts, procedures, etc.
Summary
- Sustainable cost reduction is tedious but essential.
- The key elements: Chart of Accounts, Manual Checkbook, The Four Gets, Ownership, and Visibility.
- Challenge ineffective ACPs.
Apply these strategies to drive consistent cost leadership.
