Reduction of the budget (cost cutting measures)

Budgeting is the process through which an entity formulates a plan to utilise his/her monetary resources by allocating them amongst the various tasks depending on a variety of factors. Many business enterprises due to market dynamics have been forced to look for cost cutting measures so as to increase the profitability of a firm and to maintain its competitiveness. The production manager can use a variety of approaches in order to cut on the cost. Such steps include;

Recruiting skilled interns- the manager could use the interns’ help to supplement his current workforce’s effort. This would help reduce the time frame of the project and resolving of over allocation issues, effectively cutting down on cost.
Automation of processes where possible- the production manager could advocate for the mechanization of some processes. This would help in increasing the effectiveness of the workers, reducing the time taken.

Outsourcing- outsourcing involves identifying non-core operations in a business and contracting them to an outside firm which has greater expertise in carrying out that operation at lower costs. the project manager would recommend outsourcing some non-core production functions to specialists companies. This would essentially reduce the cost of production and ensure effective use of time.

Economies of scale- the manager could work on ways of increasing the output significantly so that the amount of profits earned supersedes the cost.
HR initiative- the manager would let each member participate in giving ideas and raising suggestions on ways in which the production process would be made more effective. Human resource forms an important part of every production process and HR initiative is one of the best methods of bringing out the best in the workers.
These are some of the ways the manager would use in cost reduction.

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