Cost Down

Cost down refers to the practice of reducing cost in the supply chain through the review of actual costs and the adoption of new materials, standards, processes or behaviours to reduce cost. For example, a buyer may walk the supply chain with their supplier and identify opportunities to reduce the supplier’s costs by identifying low or non-value adding activities. Supposing the goods were wrapped in two layers of packaging on the despatch bay and the parties agreed that one layer of packaging would suffice. This would be a cost down initiative. See also Cost Out.