How a Cost Reduction Consultant Can Help Your Business
In today’s global market, staying competitive requires a business to streamline and effectively reducing costs is an integral part of that streamlining. However, attempting to do this from within an organization can be difficult and it is often ineffective. For those companies that want to see an average reduction of 15-20% in operating costs, a Cost Reduction Consultant can be a wise decision.
A Cost Reduction Consultant will come into your business, and conduct a cost recovery audit on your expenses, leases, staffing, and other business costs. The work of a Cost Reduction Consultant when combined with the realization of income opportunities can result in a significant increase in profits.
Cost reduction analysis will look at three main areas
- Direct Spending – The cost of goods and the cost of materials used to create/manufacture products, manufacturing cost reduction.
- Indirect Spending – Expenses that are not associated with the cost of the finished product, but are operating expense such as advertising, office supplies, benefits, freight, and communication expenses.
- Services – Expenses such as auto repair, temporary labor, marketing expenses, etc.
A Cost Reduction Company will also review
- Commercial leases for hidden charges
- IT hardware and software leases
- Inefficiencies in operating that lead to wasted hours
- All budget overruns
- Financial inefficiencies
- Business cost analysis
Cost reduction consultants have extensive experience and market knowledge in direct spending and indirect spending, which is common to most businesses. Cost reduction consultants charge you a percentage of the savings generated. Since there is no risk to your company and you can expect an annual savings of 15%-20%, this simply makes good business sense.
Today’s business arena has most businesses playing in a global market. Competition in this market has never been heavier. All companies are at risk of reduced profits because of higher competition and a consumer that now has more purchasing power because of global purchasing opportunities.
The difference between a successful, profitable business, and failure in a global marketplace, can be in how effective streamlining of your company. The cost reduction audit will examine the implementation of:
- Purchase consolidation
- Global purchasing
- Computerized filling of orders and sales
- Improving delivery channels
By having a cost reduction company conduct a business cost analysis, a company is in a much better position to improve your company’s bottom line. Once you know how to reduce costs in a company in the future you will be able to maintain the savings found by the cost reduction company.
In house cost cutting is key to improving profits without increasing the cost of goods sold. In a highly competitive market place, increasing the cost to consumers is best avoided whenever possible.
Every business, wants to stay in business for the long term. To do that you must not only be competitive, you must be cost conscious. The best way to maximize profits, and remain competitive is to reduce waste, which will reduce your cost of doing business. The help of a cost reduction company can be a valuable asset to your business.