All items can be categories into following categories
A CLASS : FAST MOVING ,HIGH VOLUME OR HIGH VALUE ITEMS
B CLASS : AVERAGE MOVING AND LOW VALUE ITEMS
C CLASS : LOW MOVING AND VERY LOW VALUE
These classification helps in controlling inventory cost . Major attention should be on A CLASS
category items .
All organizations has certain services to be performed for smooth functioning of unit eg Hygiene ,
security , maintenance, safety & pest control , plumbing and building repair ,which can't be wished
away and add cost to
In earlier days of factory operations these activities were carried by companies own employees ,but as
we become aware of core competencies these jobs had been outsourced which has resulted into
substantial savings .
Service contracts can be negotiated with these contractors it could be job to job basis or annual rate
COST REDUCTION IDEAS - PROCUREMENT