Most organisations accept without question the principle that costs should be kept as low as possible provided they don’t put key corporate objectives at risk. In practice, organisations often face strong pressure to increase resources to meet objectives such as better customer service and product quality.
Reducing costs is often problematic because it’s not clear exactly what is being done, and the value of this work to the organisation, in the areas you seek savings.
This course examines six ways of overcoming these problems: improving the ability of spending areas to contribute to key corporate objectives and customer needs, while reducing their costs significantly.
By the end of this module you will:
- be familiar with six techniques for reducing costs in an organisation
- be able to assess the applicability of each technique to their circumstances
- be aware that some resources are important in terms of achieving strategic goals, and should be carefully preserved and enhanced, and some are less important and might therefore be better candidates for cost reduction
- be able to reassess the management structure of the organisation in a way that provides for the right number and level of management posts to give effective management at lowest management cost
- understand how activity analysis can be used to: bring clarity about what people do in the organisation; identify cost reduction opportunities that would otherwise remain hidden; stimulate cost reduction ideas that would otherwise be missed
- be aware of the importance of purchasing effectively as a potential cost reduction opportunity, and of benchmarking as a means of identifying world class performers who can be emulated
- understand the role that reducing both fixed assets and working capital can play in reducing the costs of the organisation.