Followings are the essentials of a cost reduction program:
● Cost reduction program should be according to requirement of the company.
● Cost reduction program is a continuous activity that cannot be treated as one time or short term activity. Success of any cost reduction program may lie in only continuous improvement of efforts.
● Cost reduction program should be real and permanent.
● Example setter of cost reduction program should be top management employee. Success of this program depends on co-operation of all employees and department of an organization.
● Employees should be rewarded for their participation in cost reduction program and for giving innovative ideas related to this program.