Driving growth from within

On September 20^th 2017, ACG members and guests were invited to listen to a presentation hosted by Expense Reduction Analysts on how companies are managing costs to drive growth from within. The starting point was that many companies have a lot of unused and unrealized capital. Below are a few of the areas we discussed as key for consideration when developing an effective cost management programme.

Strategic not tactical

Across Europe, trends in cost management targets are low – around 10%. These could be much higher but too often companies look at silos and opportunities fall between the gaps. They typically take a tactical rather than a strategic approach. For instance when looking at energy they focus on usage rather than thinking is the building insulated.

It is important to allocate resources so that cost management can be constantly evaluated. Have prices changed, has the market changed – are we still getting the best value for money. It’s a continuous process not a once in a year event so programmes need a quarterly tracker.

Know the competition

Suppliers try to build relationships with customers and these can get in the way. To cut costs you need to remove the personal, create a cost culture and a commitment to change. You need to understand your industry, the commercial parameters that go with it and where you sit against the competition.

Use your scale

Reduce the number of suppliers to one and negotiate rates. Be a big fish for one supplier. In doing so the suppliers will work with you to offer value added services that may be hard to quantify in savings but can certainly help to improve the efficiency of your processes. Ultimately saving money.

Complexity of supplier invoicing

This is regularly overlooked but with the resources to focus on this you will be surprised at the savings you can generate. Too often invoices are not reconciled against agreed supplier tariffs. Invoices may not honour agreements for late delivery, capture agreed refunds, match the service agreements that have been set. Furthermore, tariffs are regularly raised without agreement and duplicate billings sent. With the proper attention companies can recover 1.5-7% of costs month on month – all savings that can be used for example to fund more resources in the business.

The biggest savings opportunties

Savings can come from everywhere but easy opportunities lie in analyzing usage of photocopies, communication costs, postage costs and office suppliers. In a 6 week period, Expense Reduction Analysts can analyse a company’s entire expense situation and provide a detailed report that highlights where to begin on driving costs from within.

For more information contact Frank van Opstal on +31 6 14 79 73 93