Cost Reduction Using Transaction Management: A Complement to Lean Management

Lean management and transaction management offer complementary perspectives on cost reduction to a business organization. Lean management focuses on preventing waste in production and is drawn from business practice. The focus of transaction management is to reduce transaction costs in the internal and external organization of the firm. The emphasis is on value creation in the long run. Transaction management is based on theories of transaction cost economics and the new institutional economics. From these theoretical perspectives, with three Nobel prize winners as originators (Coase, North & Williamson), it may contribute to the strategic management of the firm.