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Interesting Costs Cutting Techniques By Companies

Posted in Popular, Total Reads: 8439

Companies put in a lot of effort to reduce costs to increase their margins and profits. Many strategies and techniques are adopted to decrease the expenses. Here are some cost cutting techniques adopted by prominent companies, which have not only helped them reduce costs, but also become an industry benchmark in management.

WalMart’s ‘Every Day Low Pricing’

WalMart is world’s largest retailer firm, with more than 950,000 associate strength worldwide. They call their employees as ‘Associates’. As per founder Sam Walton’s philosophy- Associates are heart of WalMart’s business. WalMart, since its inception has always believed in providing quality products at lowest possible price to its customers. Which- they called as-‘Every Day Low Pricing’ formula. It has given all success and superior market share to WalMart stores especially in United States. WalMart has mastered scale economies in purchasing. It means, they’re not dependent on any single group of vendors for any of the products that they sell in WalMart stores. No single vendor constitutes more than 4% of its overall purchase volume. This gives tremendous flexibility in keeping initial costs down to WalMart. About 85% of all merchandise that WalMart sells- is shipped from its distribution centre to WalMart stores. (Competitors in the same industry has that % average less than 50) WalMart choose the location for its distribution centre in such a way that it can serve 150-200 stores nearby in a day. WalMart has its own transportation- a fleet comprises of 3,000 trucks and 12,000 trailers. While other companies have to pay for outsourced transportation costs, WalMart enjoys this reduced cost benefit. WalMart also owns satellite network system to ensure smooth processes in order filling to distribution and logistics. Because of such efficient system, innovative ideas- WalMart is been able to provide ‘Every Day Low Pricing’ to its customers.

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