Costs and causes of costs

There is a profound difference between costs and the causes of costs. It is easy to cut costs. It is harder to find the causes of costs.

When we cut costs, we cut the things we can identify on our budgets. Sometimes it makes matters worse. Cutting costs is an example of tampering.

When we remove the causes of costs they show up quickly as improvements in operating capability. They show up later as improvements in the operating budget.

The causes of costs are in the system. It’s management’s job to act on the system.