"Renegotiate contracts regularly to keep costs low" | Outlook Business
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Soumik Kar

HIGH FIVE

"Renegotiate contracts regularly to keep costs low"
Martin Kreigner, country CEO, Lafarge India, on five ways to keep a check on manufacturing costs

Team Outlook Business

Safety and housekeeping:Make safety everyone’s priority. Get to know your people and walk your sites regularly. This will ensure that the site is safe, clean and tidy, with effective signage. Safer manufacturing processes are more efficient and cost-effective.

Cut waste and recycle: Simplify and organise the working environment so that you can reduce waste. To eliminate risk of rejections, put in systems at each stage of manufacturing to check the process and quality of incoming raw materials and spares. At Lafarge, high capacity pollution control equipment (dust filters) collect tonnes of fine material, which we reuse. 

Keep an eye on input costs: Controlling raw materials costs is a strong lever to control manufacturing costs. Review and renegotiate contracts annually to keep costs low and source spares with a global approach through best cost countries.

Become a lean and green organisation: Keep labour costs in line to drive down your manufacturing costs. Make sure your workers receive proper training through tool talks, eliminate costs such as overtime and incorporate green services by using energy-efficient equipment and lights to reduce electrical and thermal energy consumption. 

Discipline in cost management process:Follow a strict ‘performance process’, starting with setting the right cost ambitions through regular local and international benchmarking. Regular follow-up of the action plans is key; so is empowerment of the shop floor to encourage them to come up with their own cost-saving suggestions in a bottom-up approach. 

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