The Cost Reduction Tips
Reducing costs is an important part of running a successful business.
Keeping overhead low and maximizing profits takes careful budgeting and planning.
Fortunately, there are several cost reduction tips that can help businesses streamline their operations and save money. From utilizing technology to negotiating contracts, understanding the best practices for cutting costs can go a long way in increasing profitability.
In this article, we’ll explore some proven methods for reducing costs and improving margins.
In this tip, I discuss embedding a cost-conscious culture where you have several comparable operating units.
Examples include retail banks or multi-site operations such as national insurance brokerages, consulting firms, law firms, or logistics providers.
Where you have multiple operating units, you have the opportunity to compare their cost profiles, identify best practices, build relationships between key staff and embed best practices across the organization.
Whilst this sounds somewhat utopian, it is achievable when you meet the following pre-conditions:
Related web sources When creating a Cost Reduction Tips culture in your organization, you need to enlist your key staff. Without their support, you will not embed a new culture.
4 Things You Should Know About Cost Reduction Tips By Doug Hudgeon
1. The operating units view themselves as somewhat analogous,
2. The management accounts are comparable across the units,
3. The cost reduction initiative has CEO/Board support, and
4. The designated managers are key staff in their units – you will get great value from selecting the heir-apparent for each unit for this role. Not only does this prove to the staff in each unit the importance of the initiative but it provides the heir apparent with the opportunity to build deep relationships with heirs in other units and see the entire range of operating models across the organization.
Doug Hudgeon is a lawyer and vendor management professional who has branched into finance and accounting shared services management.
Once you have met these pre-conditions, the steps are pretty obvious: get the designated managers together monthly to do a guided review of their cost lines.
In these reviews, across each cost line, identify and highlight the practices of the best performers and call out the practices of the worst performers.
The job of the person guiding these reviews is to set targets for the worst performers and hold them to them by next month.
The key to making this work is unrelenting persistence in assessing performance against targets in subsequent sessions. See also Tip 1 and Tip 5.
Academics studying this area refer to it as Normative Social Influence.
This area of research has shown that you can use social or peer pressure to influence behavior when the person highly values the members of the influential group and is regularly updated on their activities.
This dynamic is easily created by putting an influential team in place and updating staff regularly on progress.
A future tip will focus on why you must not be squeamish about making this a high-profile activity in your organization if you are going to embed a cost-conscious culture.
In summary, the leaders have started Green Supply Chain projects by asking some fundamental questions. The answers are illuminating their way toward innovation, profitability,and sustainability. As is the case in all path-breaking endeavors, the first-mover advantage is enormous, as are the challenges.