Are You Addicted to Cost Cutting?
Post on 16-Feb-2017
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Are You Addicted toCost Cutting?
Competition Technology Change - CustomerWe reside in a state of fluxForces out there drive us to be better more efficient, more profitable, more customer-centric, better corporate citizen, better rating by investorsWe continue to strive to better ourselvesIt is a journey and we need to keep moving
While having no end can be off-putting, we look at the milestones we cross on the way2
How are firms managing costs?
When managers were asked in a study conducted in 2013 were asked by Bain & Co. what they had done to cut costs they mentioned these elements.3
What are they considering next?
When the same managers were asked how they were planning on cutting costs in the future, they mentioned these elements.4
Cost CuttingPart of lifeSeen as a logical consequence of macroeconomic factorsIt helps the business bottom line in the short run
We do not cut costs because we feel we had been reckless in spending it. But that means, cutting costs would lead to projects getting starved and growth drying up
Consequences of Cost CuttingHeads rollIt hampers the core activitiesIt is not possible to keep the costs lowSince most firms cut costs when in dire straits, they make lousy decisionsCompanies suffer in the long run
And Yet...The ability to keep cost low is a competitive advantageSome firms are able to do it effectively and sustainably
Ad hocCost cutting hurtsNot sustainableNot a win-win situationNever welcomedShows lack of preparation and inadequacyHurts the business
Cost Cutting Versus Strategic Cost ManagementAligned to overall corporate objectivesProactiveSustainableWin-win situationHelps the business
Starts with a zero questions every assumptionProvides greater transparency and accountabilityBy taking costs out of the business, you make the business processes efficientThe business becomes more productive, where they spend less and get more doneAll the while, more cash flow to the bottom lineStrategic Cost Management
Put one in place before you need itCross functional teamProper scale for comparisonGet the buy-in of the front-lineIt is a change in mindset a culture that needs nurturing
Strategic Cost Management
Costs are a consequence of what you do, so dont let them control you it should be the other way around.
We do not believe in cost cuttingHow ERA works
With 18,000 completed projects in over 26 countries over the past 2 decades, we help clients spend intelligently. It is not only smart procurement and reducing waste. It is derived from a thorough understanding of the processes, and subsequent improvements in them. It is not a gimmick it is sustainable.Unlikely many cost management consulting firms, Expense Reduction Analysts understand that every client has different commercial concerns, corporate issues, priorities, desires and ambitions. We treat each client as an individual with a unique situation that is different from someone elses.12
Moving ForwardBreak out of silos where costs of particular departments, category or projects are scrutinisedTake a step back, and consider how activities span different departments and costs are incurredConsider the processesAnalyse themSimplify/Uncomplicate them