Cost control consultants offer their expertise and insight to their clients and add significant value to their business through a structured approach to better procurement, cost reduction and supply chain management.
FD’s relish the idea of saving money, enhancing service provision and efficiency, and improving the bottom line. For them, using independent experts is a no brainer – no upfront fees, no direct costs and payment based only on results.
Here’s the dilemma – you have had a great meeting with the FD and have demonstrated the clear benefits that can be delivered with your expertise. However, they are just too busy to progress matters themselves, so invariably delegate.
The weeks tick by slowly as you are passed through the ranks because other senior managers are also too busy. Eventually you end up at an operational level, the buyer. Then it all stops!
The procurement manager is often poorly briefed (sometimes not at all) about the service you can offer, then you are obliged to go through the whole cycle of re-stating the benefits again. This becomes even more challenging when they are working remotely as this often acts as an invisible barrier when they are on a zoom call.
Unless it is specifically mandated, a buyer’s priorities won’t align with yours (or the FD’s) and obfuscation creeps in. And therein lies the issue.
You are at the mercy of buyers who are too busy trying to manage their daily responsibilities in what is often a difficult and pressured environment and potentially sees their job under threat – you are the enemy!
There is a natural resistance as they feel they are being professionally challenged and even undermined, because you are reviewing the outputs from their work. It’s not a nice feeling.
In most cases, procurement staff are generalists so their response is quite understandable. They are ‘jack of all trades’ and masters of one or two key categories. It simply isn’t possible to be a master of all trades, so it’s helpful if you understand their position and have some empathy with them.
Buyers cannot possibly know the intricate minutia or detail of 100 plus cost categories, many of which are technically complex. What they may perceive is a great deal for their employer, can be masked by a lack of understanding in terms of the real cost of an unfamiliar category and the true savings that can be realised by an expert.
Because you can’t see poor procurement, you don’t know what good or bad practice is. The devil is in the detail, so it’s important to thoroughly understand each cost category in contractual terms, quality standards, pricing and SLA’s to get the best results.
Sometimes you need X-ray vision to see beneath the surface of a problem and get to the detail. To illustrate the point, when you are ill, you visit your GP. If your doctor can’t diagnose what the problem is, he sends you to a consultant. This is where you identify the problem and do something about it.
Precisely the same principle applies to procurement, where, in the event buyers don’t know the absolute detail of a category, they should seek professional advice to maximise the savings opportunity.
Seeking professional advice is not a weakness – quite the reverse. It becomes a strength, because using experts will help identify the key elements of an unfamiliar cost line quickly and that’s where the real savings will be made, as well as improvements in quality and service.
The current pandemic situation has changed the way business operates. With falling demand and reduced revenues, every penny is a prisoner so there is pressure to ensure that costs are forensically examined and managed. Procurement needs to be more transparent and contracts should be subject to regular reviews and adjustments.
Many companies consider that their procurement is under control and any achievable improvements would be insignificant and not worth pursuing. The belief is that if the spend is within budget and the supplier is delivering in accordance with the contract and SLA, then all is well. However, without independent benchmarking and validation of pricing and SLA’s, it’s impossible to know if they are receiving value for money or investing in the right technology.
Every tier of management within a company should be focussed on value for money because there are golden opportunities sitting there to exploit right now. The cost of being ‘too busy’ is an expense that companies can no longer afford to carry.
Auditel have over 25 years of experience working with thousands of clients and organisations who are typically overpaying for goods and services by up to 50%. If addressed quickly, this can have an immediate impact on a company’s bottom line performance.