How To Propose A Cost Saving Strategy To Management

Chances are if you have been on your job for a little while, you have noticed some processes or equipment that takes excessive time, wastes energy, etc.. and delivers less than optimal results.  So, just how do you communicate those observations to management in your organization?  You certainly do not want to embarrass yourself by having your idea torpedoed, nor let the company continue wasting money on inefficient processes or equipment.  The question becomes, how do you present your cost savings plan to the management team?  This blog will help you with that very question!

Your idea(s) for cost savings should be presented clearly and concisely with some key information highlighting the cost and the savings.  The simplest way to accomplish this is to quantify the savings for a given period of time and the payback schedule.  The payback schedule is generally calculated by dividing the cost of the project by the forecast savings.  Generally speaking, the shorter the time required for payback, the better the odds of your project being approved.

To start the process generate a (1) page overview that states the problem, cost of your proposal and the forecast savings.  A thorough and concise presentation will help sway any naysayers in the group, and you should include detailed information that includes current operating costs and how you arrived at those figures.

In the compressed air industry, EXAIR Intelligent Compressed Air products provide some easy installations and quick payback times without sacrificing production or quality – in many cases, we can improve production and quality.  Let’s consider the case below, where open tubes were being used to blow off punch presses.  We started by capping off (4) of the open tubes and trying one EXAIR 1100 Air Nozzle with a defined air pattern and we clearly needed more force.  That is when we attached the second super air nozzle, and voila! We had the amount of force and the air pattern required for this application, all while greatly minimizing air consumption and noise!  The image below shows what a sample air savings presentation sheet or test sheet may look like. 

Open Tube Cost Comparison

Considering the EXAIR 1100 Super Air Nozzle are $39 each, you can calculate that the payback time is slightly less than 10 working days per press, since two nozzles were used for each press.

When considering larger and more in-depth projects, naturally more documentation and information will be required.  In addition to the requirements for the above example, just be sure to include the following points:

  • List the action items for your proposal and any purchases that may be necessary.
  • Outline your proposed savings and document how you arrived at that number.
  • Discuss anything that may cause delays or not go as planned, and if possible, suggest viable workarounds.
  • Create a milestone schedule for all the major points in your plan.
  • Create illustrations.

If you would like to discuss increasing the efficiency of your compressed air usage, quieter compressed air products, and/or any EXAIR product,  I would enjoy hearing from you. Give me a call.

Steve Harrison
Application Engineer
Send me an email
Find us on the Web 
Follow me on Twitter
Like us on Facebook

 

 

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s