ASSESSMENT OF COST REDUCTION TOOLS AS A MEANS OF IMPROVING ORGANIZATIONAL PROFITABILITY

ASSESSMENT OF COST REDUCTION TOOLS AS A MEANS OF IMPROVING ORGANIZATIONAL PROFITABILITY

ABSTRACT

This research work investigated with a particular reference to unilever Nigeria plc, the existing an Assessment of cost reduction tools in operation. Their effectiveness as veritable cost reduction tools and above all, how much or less they have contributed to reduction of cost operation/production of the company. In carrying out a case study, three modes of gathering information were used which includes, questionnaire, personal discussions and interview and observations in the firm the data which were collected through questionnaire administered, were analyzed with the use of simple percentage method.
However, the study revealed that the company adopted and used the following cost reduction tools among others, staff training (to enhance efficiency and skill), good inventory management through economic order quantity (EOQ) model, maintenance of low labour turnover rate, strict supervision of activities, responsibility accounting system, turn around strategy, and periodic preparation of cost analysis and investigation of material variances. These strategies have not been without problems. It was found that staff members who have been denied some welfare facilities and fringe benefits as a result of cost reduction tools in vogue have developed a like ward altitude of work and a declining moral for productivity.
Based on these findings, it was concluded that these tools wopted by Unilever Nig. Plc are suitable for modern day operation/productions for a manufacturing company of its caliba. Also these tools have equally led to a significant difference in materials costs of the integration strategies, reviews of contract, establishment of a separate purchasing department and approving of overtime allowances for workers on essential duties are areas to be looked into within a view to enhancing preference of the workers areas recommended to be seriously encouraged including the accounting system in operation.

CHAPTER ONE

INTRODUCTION
OVERVIEW OF THE STUDY
The desire of every rational producer is to minimize the resources invested to achieve a desired objective. Thus, at any point in time he/she should be devising ways of reducing the cost of achieving the desired benefits.
This situation is equally relevant to organization of any kind, whether their profit oriented or non-profit oriented. However, this has made imperative for every organization especially the profit oriented ones not to stop controlling the use of resources to conform with established standards.
Also, spirited attempts should be made continuously to reduce costs without imparing the quality of their products. The above pursuits by manufacturing companies has bee era of surprising rate of inflation, especially low exchange rate and reuiry reports of grossly low capacity utilization.
Moreover, the business environment has been vary inclement due to the interplay of some other powerful extraneous variables. Maybe it was this situation Greater (1975) Page (1975:13) foresaw when he said “cost must be minimized, cost must be controlled, profitability must be improved”. These are the crises of the managers echoing through the streets if industry and commerce. Coming home, Ogulana page (1983:010) (1983) called “Nigeria is passing difficult period every thing possible must be done by everyone in position to do so, to assist the economy in marketing a quick recovery? One way of heeding to these glaring calls by managers of companies is the adoption of cost reduction tools aimed at improving profitability.

ASSESSMENT OF COST REDUCTION TOOLS AS A MEANS OF IMPROVING ORGANIZATIONAL PROFITABILITY