Cost-Saving Levers: Process & Significance
The natural question when considering outsourcing is:
How do we maximise savings and offload as much risk as possible?
Understanding the dynamics that will influence the financial impact of entering into an outsourcing arrangement can sometimes be a mystery.Expectations vary widely, and many factors will influence the outcome.When considering outsourcing as part of a long-term strategy, companies should evaluate the cost-saving levers that can affect your business's operational aspects. Selecting and implementing procurement measures is a vital part of a holistic approach to strategic procurement. Working continuously, systematically and fact-based with your procurement costs is crucial to realise savings and profitability.
IDENTIFYING THE COST DRIVERS
t is essential to understand the underlying cost drivers. The following method may be appropriate for analysing cost drivers, where the total cost is a function of the activities we do, the productivity we execute the activities with, and the unit costs of the goods and services included in these activities.
Note that the measures, or levers, can affect several cost drivers simultaneously due to linkages and interrelationships. For example, a tender process can result in lower unit prices and product standardisation based on input from suppliers during the process.
WE GO ABOVE AND BEYOND COST OPTIMISATION
Our experience shows that levers are central to holistically addressing the cost base. Their relevance, timing etc. vary, but here are some examples to consider:
The goal is to have a bespoke well-defined, well-managed, optimal strategy suited to the organisation's specific needs and the project. Hence, we collaborate with our clients to better understand their requirements to identify and execute cost optimisation/savings opportunities and expedite digital transformation.
Cabritski, Managing Partner, Alex Grundy:
It’s not that clients are doing lots of wrong things; it’s just that their data is so inordinately complicated, and the executives are busy running their company; consequently, cost opportunities go unnoticed and unrealised. With our Cost Opportunity Assessment, it doesn’t actually take the client very much effort to get clean, complete, and consistent data. Then above that, Cabritski’s insights can help you build a roadmap, gain control of your spend, and solve the most significant cost and transformation challenges.
Let us help you avoid additional costs and maximise your earnings!
Within a few weeks our Cost Opportunity Assessment helps you create of a shortlist of cost reductions opportunities, following a proven process, executed by experienced external category experts. For more information about how we can help, simply book a free exploratory call