Cost Out

Cost out refers to the practice of eliminating cost in the supply chain through the review of actual costs and the adoption of new processes or behaviours to eliminate cost. For example, a buyer may walk the supply chain with their supplier and identify opportunities to eliminate costs by pinpointing low or non-value adding activities and redesigning the process to eliminate them. Suppose goods are counted after being picked and then checked again on the loading bay prior to despatch. The parties might agree that the second check could be eliminated. This would be a cost-out initiative. See also Cost Down. .