Cost Optimisation: The Differential Pathway
What is cost optimisation?
Many see it as a euphemism for cost cutting exercises, but actually it's much more of a re-distribution of expenditure to drive your business forward. Naturally in this process, some areas do get reduced budgets, whilst others see increased budgets to forge innovation and fund development of growth areas.
So, how do you even start it?
There are lots of ways of going about cost optimisation, but with a wealth of experience in corporate business consulting, this is The Differential Pathway:
1. Knowledge
It's true that knowledge is power. Power to change. Power to succeed. Power to do something different and achieve better results.
To start optimising your costs, you must understand them. Whilst most businesses claim to understand all of their costs, actually very few truly do.
When it comes to cost optimisation, knowledge isn't just the negative line you put down on the P&L every month. To truly know your costs, you need to know every manifestation of what drives them, because driving cost optimisation otherwise will merely fail. At the very least, you need to:
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Know Your Core Service Requirements
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Know Your People
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Know Your Customers
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Know Your Contracts
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Know Your Competitors
and of course;
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Know Your Base Costs
2. Monitoring & Analysing
Whilst it may be comfortable to sit back and assume that a year after you tendered your business, you're getting the best possible deal - that is not necessarily true. Cost Optimisation not only requires business analysis, but followed through with strategic planning, corporate governance, a good, solid tendering process for alternative provision, project direction and many other essential practices.
3. Positive Action
Some cost optimisation undoubtedly results in reducing unnecessary or undesirable burdens on the business. And it's not always necessary to stay sucking-up to a bad or mediocre deal that the market has overtaken. We've worked with many clients and their existing partners to get better results from just 12 months into a 10 year contract. Re-negotiation is not only possible, but should be seen as a business-as-usual activity.
Conversely, new investments made with freed-up cash should be done with caution and in a fully controlled way. We work daily with clients to run their tendering and selection processes.
4. Continuous Assessment
Cost optimisation needs to become second nature to you and all of your employees. When cost analysis becomes a critical component of all roles within an organisation, innovation thrives. Better ways of doing things are more easily uncovered by employees rewarded by their forward-thinking. Optimisation as a way of life is a critical aim.
More Information
If you'd like more information on how we can help you, use the link below to get in touch as soon as possible and we can help start you on the pathway to successful cost optimisation. Not as a project, but as a way of life.