Trying to catch up with inflation has made it a massive challenge for businesses to contain operating expenses (OPEX).
Beleaguered executives are having their budgets hammered in every way from being allocated the same budget as last year, with limits placed on capital expenditure (CAPEX) leaving nothing to spend on innovative technology, to absorbing annual increases in pay and – the final zinger – having to reduce operating costs year on year.
It’s a difficult trading environment for certain. So, when it comes to having the conversation in a budget meeting with directors, trying to explain why operations year on year aren’t the same, and where the variances and the resulting costs were created, you need the best data on your side.
Let’s consider where variances and additional costs occur:
Stockholding
Stockholding for many retailers is running high. Excess stock needs storing, counting by the inventory team and locating by the pickers. Every pallet pick face of dormant or slow-moving stock is another metre of travel.
SKU Proliferation
While it is assumed the same number of units are being sold year on year, SKU proliferation can occur where the number of SKUs being handled in the warehouse increases through extra pick locations and extra picking activity on top of the usual stock counting, or Perpetual Inventory routines.
Carrying Capacity
People are hard to come by these days and if they have been trained to a level of competence, it isn’t always wise to release them when volumes drop if you are only going to repeat the recruitment cycle of attract, train and retain when volumes rise again.
Data Driven Decisions
Addressing any of these points becomes contentious when budget challenges are not backed by data that reflects the realities of everyday operations.
This is where Vitesse can help. It is a tool that can identify where money is being spent, where opportunities lie to reduce costs, and through the use of digital twins it can visualise the effect of changes within an operation.
The ability to take important decisions about your operation and setting budgets based on data is a powerful advantage, giving credibility and certainty for the team responsible for delivering your objectives and for the business when forecasting future costs and profits.
Interested to find out more? Talk to Vitesse today.
