Pulse readings of cost reduction programs
Caruso, Peter Frank
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The purpose of this study was to discover the extent to which in-plant cost reducation programs are used. Library research was used to provide background information for the study. A questionnaire survey, however, was used to obtain "pulse readings" of companies using cost reduction programs. The data revealed the flowing: 1. The five sizes of firms using cost reduction programs. 2. The type of products made by those firms using programs, as far as use and market are concerned. 3. The ratio of incentive plans having an influence on management to conduct a program. 4. The extent to which firms with production work standards are motivated in using programs. 5. The effect unions have on management's decision to conduct a program. 6. The effects programs have on employees, as far as productivity, morale, and turnover are concerned. 7. The effectiveness of cost reduction programs as a management tool for cost control. 8. The extent to which programs were used: what types were used, when were they last used, by whom were they administered, and were they successful. The study reached the following conclusions: 1. Cost reduction programs were used by manufacturing-type firms with employees totalling 250, 500, 1000, 2000, and over 2000. 2. Programs were conducted by manufacturing-type firms regardless of the product's use or market. 3. The ratio of incentive plans having an influence on management's decision to conduct a program is 100%, plant sizes of 500, 2000, and over 2000 employees. 4. 75 percent of the firms indicated that their day work payment plan had an effect on management's decision to conduct a program, plant size of 500 employees. Ratios of 60 and 61 percent were recorded for plants sizes of 2000 and over 2000 employees, respectively. 5. 90 percent of the firms using programs had over half their work force covered by production work standards. 6. Programs increase employee productivity and morale in most instances but show little effect on labor turnover. 7. Almost unanimously, firms stated that programs were an effective tool for cost control. 8. Programs of various types were extensively used; within the past 6 months many had been used; in practically all instances programs were successful. From these conclusions, the following recommendations are made: 1. Cost reduction programs should be expanded to include indirect labor areas of the plant. 2. Programs should be used as a complement and not as a substitute for production work standards. 3. A well planned, co-ordinated, and administered program should be conducted on a continual basis. 4. Manager in industrial engineering should administer the program.