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In today’s highly competitive construction equipment industry, maintaining market leadership requires a relentless focus on cost control and coordination. As we face the dual challenges of rising customer demands for enhanced value and ongoing pressure from increasing commodity prices and fluctuating currency rates, it becomes evident that our approach to cost management must be both strategically robust and continuous. Continuous cost control Cost control is not a one-off activity; it is an ongoing process that is integral to our business strategy. Remaining competitive depends on our ability to systematically identify and eliminate waste, or Muda, from our processes. This philosophy is deeply rooted in manufacturing principles, where the emphasis is on improving efficiency, reducing variability, and ultimately minimising costs without compromising quality or operational effectiveness. In our industry, where material costs and process expenses make up significant portions of overall expenditure, the importance of cost control is paramount. By closely monitoring and optimising these costs, we remain resilient in the face of market pressures. Identifying areas for cost reduction Effective cost control begins with a comprehensive understanding of our operations across all functions—whether design, procurement, manufacturing, warehousing, logistics or indirect material management. The primary aim is to identify areas where costs can be reduced without sacrificing the quality or efficiency of our products and services. This demands a detailed approach, where every aspect of the production process is examined for potential savings. Role of cross-functional teams (CFTs) One of the most effective strategies to achieve this is through the formation of Cross-Functional Teams (CFTs). These teams bring together expertise from various departments, offering a more holistic view of our operations. By involving stakeholders from different areas of the business, we foster a culture of collaboration and ensure that cost control initiatives are based on a thorough understanding of potential opportunities and risks. Furthermore, a bottom-up approach is central to our cost control strategy. By setting overall targets and distributing them across CFTs, we empower these teams to identify and implement cost-saving measures within their specific areas. This not only enhances accountability but also ensures that cost control initiatives are tailored to the unique challenges and opportunities in each function. Kaizen philosophy We embrace the Kaizen philosophy, which advocates for continuous improvement through small, incremental changes. This approach engages everyone, from managers to employees, in refining and sustaining our processes through small group activities (SGAs) and the PDCA (Plan-Do-Check-Act) cycle. Our focus is on reducing costs by eliminating waste (Muda), unevenness (Mura), and overburden (Muri). Key levers for cost control include: Negotiation: Leveraging strong relationships with suppliers to secure favourable terms. Competition benchmarking: Continuously comparing our performance with industry standards to identify areas for improvement. Value discovery: Innovating in design and manufacturing to reduce costs without compromising quality. Alternate sourcing:Identifying new suppliers who offer better value. Consolidated buying:Pooling purchases to negotiate better prices. Import substitution with local sources: Reducing dependency on imports by sourcing locally, thereby mitigating currency risks. Vendor base rationalisation: Streamlining our supplier base to improve efficiency and reduce costs.Inventory control: Optimising inventory levels to avoid excess costs. Manpower efficiency improvement: Enhancing productivity by minimising production losses and rework. Technological innovations Additionally, advancements in technology and digitalisation play a crucial role in our cost control strategy. By leveraging advanced analytics, automation, and real-time data, we gain deeper insights into our operations and uncover cost-saving opportunities that were previously inaccessible. Digital tools enable us to monitor performance more effectively, predict potential issues, and implement corrective actions swiftly. Strategic vendor partnerships Collaboration with vendors is another critical aspect of our approach. Engaging them early in the process allows us to leverage their expertise to identify cost reduction opportunities. This partnership-driven approach not only achieves better outcomes but also strengthens our relationships with suppliers, ensuring long-term benefits for both parties. In conclusion, cost control and coordination are not merely about cutting expenses; they are about enhancing our overall value proposition. By adopting a strategic, structured, and collaborative approach, we can navigate market challenges, maintain our competitive edge, and continue to deliver excellence in all our endeavours. About the author Sandeep Singh, Managing Director, Tata Hitachi, also serves as Executive Officer at Hitachi Construction Machinery, Japan, and has held leadership roles in ICEMA and CII.