Strategic Cost Reduction
While cost cutting may no longer be the number one strategic priority for organisations it still presents a key focus for business strategy. In our experience businesses need an approach to cost management and reduction that is not only about cost reduction. A more sensible approach to addressing businesses challenges is strategic cost reduction, which achieve two possible outcomes.
- Operating advantage – the goal is to rationalise, simplify and automate operational capabilities to deliver improvements that produce commercial value such as vendor management cost reductions, headcount reductions, marketing spend reduction, process improvements, output improvements etc.
- Structural advantage, the goal is to determine the best structure, product and service portfolio and assets required to focus on the core business strategy, sustained efficiency and long-term growth achieved by off-shoring initiatives, strategic outsourcing to gain access to utility style pricing models, consolidating product or customer portfolios etc.