Lean Principle for Cost Reduction

Traditional thinking dictates that you set your selling price by calculating your cost and adding on a margin for profit

In today’s competitive market the customer sets the price and you don’t have the luxury of adding a profit margin

The only way to remain profitable and grow your business is to eliminate waste from your value stream, thereby reducing costs—cost reduction principle

      

Eliminating waste is important because customers not only set the price, but they also demand price reductions