Reduce the Rate of Cost for the Input Used to Produce the Output

Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.

E. Request supplier to lower the price of the input:

Negotiations with the supplier may sometimes result in a lower unit price for the input.

Reduce supplier cost in return for lower rate

No.	Industry SIC	Year	Notes
1	0	1992	Purchasing tip: Understand suppliers' problems and offer to help. Sometimes products which are over specified for your company's needs are available at low cost if the supplier has excess inventory.
2	0	1992	Purchasing tip: Adjust ordering practices to fit a supplier's manufacturing cycle.
3	0	1995	Tip: Dispatch your production people to help suppliers lower inventories and cut waste. Benchmark your suppliers against their rivals.
4	3651	1991	Bose has asked seven vendors to eliminate salespeople and buyers. Instead, the vendors have placed representatives in Bose's purchasing department (at the vendors' expense) to create orders, manage inventory and provide parts "just in time."
5	4899	2003	Polycom has cut the amount of inventory its distributors and resellers hold. That can lend pricing control and a better view of actual sales trends.
6	5411	2005	To find growth, Save-A-Lot is setting up shops in inner cities. The founder of Save-A-Lot started making his own labels from low-quality paper. He named the cream cheese Coburn Farms after his mother-in-law's last name, and asked employees to invent brands. New suppliers stuck the labels on generic goods. He opened up shop in vacant groceries with dirt-cheap rent. Deliveries were packed onto one truck so workers wouldn't have to move multiple loads. Having nonunion workers also lowered costs. To get suppliers to offer cheaper goods, the store didn't charge so-called slotting fees, which many stores levy on manufacturers to put their products on shelves. Instead of asking food makers to take back damaged goods, the prices were marked down.
7	5942	2002	Amazon gets a break on shipping rates by using a method called postal injection, in which it uses its own trucks to drive truck loads of orders to local post offices from Amazon warehouses.
8	7372	2004	In contrast to Nintendo, Sony had lenient terms for licensing. It reduced the risk of creating many new games by making them very cheap to produce. As a result, Sony developed in house only 15% of the games for their console.
9	7841	2001	Blockbuster wants to tweak its deals with Hollywood studios to make them include better financial terms and an end to the requirement that Blockbuster stock every title released by the studios. Blockbuster knows which type of movies and what actors audiences like and wants to use that info to "focus on products that are going to generate business."

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