The official business definition of cost avoidance vs cost reduction is an important distinction to understand. Cost avoidance is the process of preventing costs from occurring in the first place. This can be done through measures such as streamlining processes, automating manual tasks, and reducing waste. Cost reduction, on the other hand, is the process of reducing existing costs. This can be done through measures such as renegotiating contracts, renegotiating supplier prices, and reducing overhead costs. Cost avoidance is generally seen as the more desirable option as it prevents costs from occurring in the first place, while cost reduction is seen as a more reactive measure. Cost avoidance is also seen as more beneficial in the long run, as it can help to reduce costs in the future, while cost reduction is more focused on reducing current costs. Ultimately, both cost avoidance and cost reduction are important strategies for businesses to consider when looking to reduce costs and improve efficiency.