Expense reduction experts
Expense reduction experts and consultants offer to make savings of up to 15% - 20% on your current costs, assuming that the specific areas have not been tackled actively in the past three years. These experts can provide you with advice and support to identify and understand the cost drivers of any commodity or service throughout the supply chain and show you how to make it happen:
In each stage of the supply chain there are potential areas for cost reduction. The challenge is to identify those that can deliver savings with the least disruption and with the fastest results.
Purchasing from Suppliers
Direct and indirect materials are an obvious candidate for cost reduction. In a manufacturing organization the following big ticket items are areas that the experts will target for trimming.
• Raw materials
• MRO (Maintenance, Repair and Operating expenses)
• Packaging
• Tools and consumables used in manufacture
Essential and business support services often have more scope for cost reduction than materials. High spend areas should be the main focus although the experts will go for some "quick wins" to demonstrate what is possible. Some main areas for savings:
• Energy and Utilities
• Facilities, security and safety
• Courier and travel
• Temporary labour and HR services
• Telecommunications
Production
Production expenses can be tackled in many areas. Experts will identify opportunities as follows:
• In the design of the product. Product development determines up to 80% of product cost and this is hard to remove later.
• In Lean Production. You can improve labor productivity, cut production throughput times, reduce inventories and cut out errors and reduce scrap.
• Overhead Cost Reduction. Inventory carrying costs, power, and administration costs can be reduced.
• Product Line Rationalization. Focus is on the most profitable product lines and products that are losing money should be highlighted for attention.
• Quality. The cost of quality can be 15% to 40% of revenue. Experts look for areas that are over-managed.
Distribution to Customers
Potential areas of expense reduction are the big spend items, warehousing, rail and road transportation, air-freight and reverse logistics. Specialist consultants should conduct an audit to establish details of the current operation, both in-house and outsourced, including all modes of transport. Potential costs that can be reduced may come from
• Operational improvement of modes of transport and rates negotiation
• Review of warehousing and distribution centre operations to identify possibility for centralization
• Use of technology and software to provide efficiencies
• Review of the allocation and use of labour
Employee costs are a big slice of overall operating costs. Cutting staff may be costly in the long term as skills may be in short supply in a buoyant market. Reliable and noteworthy <a rel="nofollow" onclick="javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link/3544152']);" href="http://www.clear-vantage.eu/en/">expense reduction experts</a> will ensure sustainability of the business over short-term cost cutting.
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The foundation of a good business isn't only about starting with a big capital, finding a good location, and marketing your trade.
To effectively reduce costs, you need to call upon expense reduction analysts. These highly qualified and highly experienced professionals know the ins and outs of business from working in many different business sectors and levels.
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Let's assume you are looking to hire a Supply Chain company. What you need is assistance with cost reduction in sourcing materials and services, improving your operations and streamlining your processes rather than a complete systems re-fit which may be expensive and time consuming.
Looking to increase efficiency in your supply chain? It's a challenge, because pressure of work and increased day-to-day responsibilities mean that key supply chain people do not realistically have time.
How can supply chain consulting affect your bottom line? Supply chain consultants come in all shapes and sizes and it is prudent to research their offerings carefully. Many consultants specialize by industry and some even concentrate on specific steps in the supply chain or in a given type of technology solution.
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