To rationalize the costs
At every time it's impossible to increase the sale margin "to improve earnings" or "to cover losses" because the market doesn't accept a such action, the only way to solve the problem is: to work (operate) on costs. This can be done only by a diligent and accurate study on its own processes, and then only by careful analysis of corporate costs in order to reduce them efficiently, rationally and durable.
The starting point of waste hunt is the identification of valuable what. The resources consumption is justified only to produce value otherwise is waste. The definition of activity value takes on meaning only if expressed in terms of production contribution of item or service able to satisfy the inside or outside needs depending on enterprise targets.
The value flow analysis is very useful to highlight big waste quantities by activities classification in three categories:
- Activities which create value (its cost can be transferred to customer)
- Activities which don't create value but necessary in some degree
- Activities which don't create value and no necessary (can be eliminated immediately)
- Inappropriate costs (eliminable) or compressible on equality of service and characteristics in the different costs centres.
"To rationalize the costs" is the MMC methodology to intervene quickly on these aspects, both processes and activities level and in evaluation "make or outsource" and on corporate costs centres in order to reduce its importance by analysis, cutback and alternative " procurement".