Cost management

When the economy is getting difficult there are 2 things that any business should do. First make sure your marketing and sales strategy is adapted to the market situation (see the growth pages). Secondly to make sure your cost structure can handle a possible down turn of the business. This means:

• Reduce unnecessary costs. Every successful business tends to get a bit "fat" in the good times. This is understandable. But when the economy turns downward the first thing is to cut out the fat and make sure the business runs "lean".
• Make sure your supply chain is cost effective. In good times businesses are generally focusing on growth. This sometimes leads to non-optimal supply chain solutions, but because the business is doing well, there are no strong incentives to optimize the supply chain. When the markets are getting tighter this needs to be addressed.
• Replace fixed costs by variable costs to lessen the impact of reduced sales

As the Profit Experts have a wide ranging experience covering most industries, from small to large companies, we can identify quickly if there are any business areas that need a change in the cost structure. We can also help you implement management tools that allow you to monitor the cost structure over time.

Examples of the work we do are:

• Analyse the supply chain and suggest improvements in:
  • Product sourcing and cost of products
  • Supplier Management and negotiations about prices, quality and service levels
  • Optimal stock levels and stock control management
  • in- and out bound logistics
  • Optimize processes in sales (quotations, customer qualification, etc.), order processing, fulfillment and distribution
  • Handling of returns and warranty issues
• Analyse the cost of staffing. Outsourcing of non-critical processes to move costs from fixed to variable.
• Analyse and suggest improvements in the area of financial costs, working capital and cash-flow
• Reduction of energy and environmental costs by identifying win-win opportunities
• Improve efficiencies through re-engineering of business processes and the use of appropriate IT systems

The Profit Experts offers a quick 1-day diagnostic that will give you an overview of the possibilities to improve your costs. Based on this we can then help you optimize your costs. For more information or a free initial consultation, please contact us today.