Cost analysis – don’t cut staff to cut costs.

A certain level of anxiety is felt when the “cost cuts” rumour is circulated around the office. Does this mean we have to go back to using long-life milk in the kitchen? Is my department budget going to be decreased? Are our jobs safe? Before hysteria is created, looking at the less obvious internal costs may just give you the breathing room you need. You may be surprised by the savings that can be achieved through the simple and interruption-free Cost Analysis process.

Cutting costs isn’t only necessary when your company is looking to downsize and prop up the bottom-line. While this is often the most common motivation, reducing expenses and saving where possible is always beneficial, even when everything is operating smoothly. The simple process of conducting a Cost Analysis can leave room for a significant increase in investments and also create time efficiencies. It is simply good business practice to annually review where cost savings can occur across your business.

If not staff cuts then what?

CostSmart’s been in the business of finding product and supply chain management efficiencies for over 15 years. A Cost Analysis begins by reviewing internal costs, such as consumables, incidentals and items not manufactured for the end-user (non-core products). These products often take precious time to source and cost more than they should. Sourcing of such products usually becomes the responsibility of already overloaded departments such as procurement and/or marketing teams, taking away from their core tasks. Items such as POS collateral, uniforms, promotional items and print material (letterheads, envelopes, marketing collateral) are areas where the most cost savings can be achieved.

We source goods from a range of vendors in order to seek the best price, quality and fit for your business. It is not unusual for these providers to reject selling directly to you at a reduced price (or at all) unless you’re a distributor. That’s where CostSmart can step in and consolidate these expenses for you. Subsequently, this will achieve cost reductions and efficiencies through saving time on sourcing, supply negotiations, and ongoing supplier relationship management. Giving you precious time back to focus on what’s important – your core business, whilst also saving you the pain of countless hours researching and sourcing them.

A little bit of purchasing power goes a long way.

The reason a company might be spending more than necessary on internal costs is often due to purchasing power. For example, ordering a year’s worth of promotional material in one order doesn’t always fit the budget. We act as an extension of your company and carry out bulk purchasing on your behalf to obtain economies of scale for product purchases. Our C-Code methodology means that your business can use our purchasing power to buy and store your products in bulk. However, rather than blowing the budget, you are invoiced for the products as you require them. Products can be ordered via a fully customised e-store and are usually dispatched the same business day. Just in time delivery at a fraction of the cost!

Outsourcing your specialised sourcing, storage, management and distribution requirements of your internal products will free up valuable time and money. These resources and extra funds can be diverted to more critical areas in your business. This process also allows your teams to use their time more effectively and focus on their core tasks.

Improving your bottom line doesn’t have to be linked to stress or a decline in staff morale. Low-cost products such as pens, letterhead and brochures are routinely added to the expense sheet with little thought. Conducting a thorough cost analysis of these products could be the difference between significant cost savings or letting a team member go.

Look out for more information on how we provide this service to our clients in future posts. Plus a range of other money-saving methods your business may not have considered.