Vital Few Profit Improvement Techniques

Most CEOs unleash too many profit-improvement initiatives. I recommend a simple exercise to gain perspective and create a sharper focus. Look at your current P&L and classify costs into the following four costs.

1. Costs embedded in the materials - Material cost as % of sales ( Techniques : waste reduction, vendor development, negotiations, value engineering and segmentation ) ( Segmentation is probably the best technique as it enables you to incur only those costs that are valued by the target customer and hence possible to become compensated by better prices ).
2. Time costs - Fixed Costs of facilities (1) rents and running costs of  offices /spaces (2) depreciation and running of the cost of the equipment for facilities ( Techniques : productivity improvement, scheduling, more throughput, peak-weak demand adjustment )
3. Fixed Costs of people : salaries, perks and travel ( Techniques : Motivation, Aligning, Competency development, organization roles and structure planning, selection, recruitment and on-boarding, career path planning, compensation, incentives, PMS, continuous education etc)
4. Interest costs on your working capital (inventories and debtors)( Techniques : Supply chain management, range planning, channel management)