Cost Improvement- The Business Challenge

April 22, 2010  |   Posted by :  

“Improve Your Profits – Generate More Cash – Invest in New Products and Markets”

Imagine you are a business or an organization, and your shareholder or management is insisting that you improve your profit margins, generate more cash for growth or provide more or better services within your current budget – what do you do???

You really have only two options

Sell more – okay that’s fine if you can !  -or-

Improve your costs and productivity – also fine but HOW?

Improving costs and productivity is what we call cost-improvement.  It’s quite simple: you need to either spend less or get more for your money.

Cost Improvement Program

Suppose you have decided to improve your costs.  You have set a target (for example 5% of annual sales)! Now what do you do?  You need some sort of managed activity, which will ensure the target is met. This activity is what we call a cost improvement program.  Our job is to help you set-up a company-wide approach or initiative, thereby providing the answer to these typical questions.

What is being saved?

Once you have defined a target, we organize workshops with your key staff and experts to identify cost-improvement or productivity activities known as measures.  We use measure gathering templates and best practices to ensure that enough measures are found to achieve or exceed your target.

Who is saving it?

Together, we define the rolls and responsibilities for our your improvement activities using our standard methodology. We nominate the measure responsible staff and managers.  Everyone should know what he or she is supposed to be doing – and why!

How is much is being saved?

When the rough measures are identified, the team must analyse them to ensure that they are realistic and feasible.  They may also use our standard analysis tools to estimate the net savings.  Here we also do a quick check against our standard principles and rules to ensure that the measures fit the companies required criteria (for example tracking cost savings and not quality issues).

Why are we saving it?

You know why we are setting-up a cost-improvement-program, but does your staff.  We help you define a communications strategy, using standard templates, which can be quickly sent out, to inform the organization of the importance of the program and its target.

When will it be finished?

As the measures are being implemented, the responsible person gives a quick electronic update once-per-month on the progress and status of the activity.  This allows management to address any potential roadblocks at an early stage.

Are you sure they are saving it?

As each measure is completed, the activity is reviewed to ensure that it has been correctly implemented, and the finance team confirms that the financial impact is visible.

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