cost optimization crowe

Cost optimization - examples

Maciej Krzekotowski, Director of the Business Consulting Department
8/28/2020
cost optimization crowe
Optimization activities - in various complexities and areas - are systematically implemented by companies. Based on our experience, gained during the implementation of various projects, as well as during discussions with business owners, we present several practical examples of cost optimization from different perspectives.

1. Implementation of the Electronic Document Workflow

It applies to almost every industry, especially for the administration of large volumes of documents. In the construction industry, for example, the implementation of this system has made it possible to:

  • shorten the execution of the process by 40% of the activities performed, eliminate errors or lost documentation, enable quick decision making,
  • achieve long-term (at the level of 20%) cost optimization related to both costs of remuneration of employees involved in the process and office supplies,
  • gain comprehensive knowledge about the process and the data processed,
  • increase flexibility of operations (stationary, remote), which is particularly important at times such as pandemic.

 

2. Business process optimization

The example of the distribution industry shows that the good effects can be achieved by the following changes:

  • streamlining the work of specific processes, by reducing the number of performed activities (freeing up a few full-time jobs, which could focus on other activities no one has ever performed before, but which contributed to the company's innovation growth) and their partial automation,
  • moving some of the activities to online and increasing the efficiency of contact both with clients and between employees,
  • changing the sales model - leaving traditional sales only in the identified areas, while moving the rest to the Internet / tele. After full implementation and familiarising the clients with new options, the change has brought almost 30% savings, at the same time allowing for maintaining the existing level of sales.

 

3. Implementation of Management by Objectives

The example of a manufacturing company shows that, the measurable benefits can be achieved by:

  • familiarizing employees with the organization's strategic objectives and training them to translate these goals into their own actions,
  • implementation of a bonus scheme related to the company's objectives - employees focus on the key objectives of the organisation. The organization has increased its profits in the long term by over 40%, which resulted both from the implementation of the management system by objectives and other parallel improvement activities,
  • clear information on the competence and capacity of employees to provide added value to the organisation - allowing for changes in the structure or shifting of employees between areas, thus increasing not only cost-effectiveness but also employee motivation.

 

4. Optimization in the health sector

In recent years, medical units have focused particularly on two areas:

  • changes in the form of cooperation with doctors, mostly for contracts.
  • It has not only increased their motivation and work efficiency. An additional element is the fact that salaries have been naturally reduced (or in the case of their significant reduction, meant the end of cooperation with a given doctor). These actions have led to a significant reduction in costs.
  • implementation of group drug purchases between (often competitive) entities. Activities using economies of scale led in some cases to cost savings of up to 10%. This is a typical example not of reduction but of cost optimization.

 

5. Optimization of IT functions

The optimization of IT functions has recently focused on:

  • analysis of the costs of IT equipment (use of post-leasing computers, in extreme cases - the possibility of using the rented ones).
  • migration to Cloud applications to save on IT structure expansion. Use of free / less expensive computer software (expandable) as far as possible or - in order to increase cost flexibility - time (for example, monthly) fees for licenses used in a given period.
  • checking the possibility to outsource services - it brings cost savings, and the fact that together with the outsourcing of functions the risk is also transferred is of great importance. A properly constructed contract also provides for cost flexibility - but it depends on the intensification of the company's operations.

 

6. Back office cost optimization

Office costs (for printing and paper) are mainly optimised by:

  • automation of printouts and the implementation of a possibility to analyse print costs per MPK / department / employee.
  • implementation of automatic double-sided printing, grayscale or toner saving mode.
  • printers leasing, that allows to obtain a fixed cost of printout, facilitating the process of budgeting and monitoring.

 

7. Optimization of rental costs

Costs related to premises and office space, especially during a pandemic, have also been optimised. Companies from all industries have been analysing and looking for cost optimisation achieved by:

  • the rented area (and its ratio to remote operation),
  • implementation of the so-called Hot Desk - lack of permanent desks assigned to a given employee and the possibility of booking them for a day of presence in the office,
  • coworking and the use of shared spaces for work, meetings and events, it is becoming increasingly popular among some businesses.

Business process optimisation

Consulting

Contact our expert

Maciej Karzekotowski
Maciej Krzekotowski
Business Consulting Director
Crowe