The term "cost effective" refers to the amount of return that you get for a given level of expenditure in a production process.
Whenever you produce a good or service, you incur costs. You have to buy machinery, you have to pay your workers. Of course, you want to get a return for these expenditures. You will want your production process to be cost effective. That is, you will want to get as much as production as you can for each dollar you incur in costs.
A process is cost effective if it gets as much production per dollar of costs as is possible.