Why slashing costs will only get you so far
Companies that are positive about cost management and see it as more than simply making savings are the ones that will be in pole position to take advantage of economic recovery, according to a recent survey commissioned by Auditel and Management Today.
Taking part in a round table discussion on how companies can make savings, Chris Allison, MD of cost management specialist Auditel, said: ‘The major challenge will be moving from a simple cost reduction exercise to more strategic cost management. It’s not just a matter of looking at historical data, tendering that out and then getting a better result. Cost reduction is the first part of the process, but you need a strategy in place to make sure you monitor those costs on an ongoing basis. You need the right tools and knowledge base.’
He added: ‘Most businesses focus purely on a cost reduction exercise. That means that they get the initial savings, but these are not monitored, and you start actually getting price increases. These costs go flooding back into the business and all their hard work comes to no avail.’