“There is always room for improvement, you know – it’s the biggest room in the house.” – Louise Heath Leber
A key challenge for management teams is to increase or maintain profit margins in the face of increasingly competitive markets. We help our customers to consider and select profit and efficiency improvement options, and to plan and manage implementation.
1. Overhead Rationalisation. The administration of the business is an essential task, but often effectively unproductive in the eyes of customers and investors. We have planned and implemented overhead cost reductions in excess of 20% through the systematic and rigorous application of one or more of the following: zero-based budgeting; shared services implementation; functional duplication avoidance; HR, Finance and ICT off-shoring; process flow re-design to minimise hand-offs; ICT infrastructure and applications consolidation; workspace re-planning; business and function amalgamation.
2. Operating Cost Optimisation. The greater part of cost is normally within the operations, making it very important to manage cost effectiveness in a manner that will avoid disruption to customer service. We have conceived and managed cost reduction plans to remove tens of millions of pounds of cost through the following: targeted delayering of management through increasing spans of management control; depot and area rationalisation; implementation of standard costing models for sites, depots and area offices; supply chain management; controllable cost assessment; internal trading; risk management.
3. Discretionary Spending Reduction. Discretionary spending can easily increase without the management being aware of it, and it is important to establish and maintain these costs at a sensible level. Savings of 20% are readily achievable in discretionary spending. There are in addition situations where businesses need to take stronger short term actions in order to achieve budget, or merely to survive. We have much experience in the approaches for managing discretionary spend disciplines for reduction of travel costs, entertainment and ‘marketing’, personal expenses, recruitment, agency staff, and overtime.
4. Acquisition Integration. Acquisitions should rarely be undertaken for cost synergies alone, however a robust integration plan is normally essential in order to deliver an effective ‘joined up’ business. We have experience of delivering major integration programmes, involving the following key approaches: ‘No increase on central and divisional overhead’ starting position; standardised business leadership structures; elimination of duplicated processing centres; property clustering; group function consolidation; cross-selling opportunity identification and development.