Cost reduction is a continuous process of analysis by various methods of all the factors affecting costs, efforts and functions in an organisation. The main aim is to have continuous economy in costs. The process finds out the substitute by finding new ways or methods. Under this process necessary steps are taken for further modification in the method. It challenges the standards forthwith and attempts to reduce cost on a continuous basis. The emphasis is partly on the present costs and largely on future costs. It is a corrective action. It operates even when efficient cost control system exists. There is room for reduction in the achieved costs.