Most businesses right now are reviewing their cost base.
Getting cost out has obvious benefits but in the current trading headwinds reducing costs might be the only route to staying afloat if top line growth is elusive.
Larger corporations may still plough on with technology investment programmes – some might be essential, even business critical, if incumbent systems are reaching the end of life.
Others might need to creative a competitive advantage, enhancing a service offering or reducing the workforce as a result of automation.
Tactical steps to reduce costs could look like the list below:
Spans of control will come under role – is there a balance of responsibilities and sufficient focus?
Layers of supervision of management – can layers be reduced or roles merged?
Costs of maintaining service level promises –
This is approach has a number of facets in terms of carrying resources in the event forecast volumes materialise, rolling volumes to maintain core hours and then the courier #costs of hitting next day SLA’s
Forecast Accuracy – how many hours are wasted due to having resources available for volume that doesn’t materialise – improving operational flex is one thing having an accurate forecast is another
Is banked hours a potential in these difficult times?
Once more common than it is today but a great way to see engagement in action as it requires a degree of trust as well as commercial exposure but it can work and will help to reduce overtime and agency spend.
Inventory counting – can it be reduced but targeted?
Quality Checks – how much effort is being spent to identify/prevent errors leaving the warehouse because we aren’t ‘right first time’ – do we know how much it is costing to correct errors as well as trying to capture them?
Inbound/Goods In – is vendor compliance in situ enabling swift and accurate of new receipts or is rework/re receiving common which inevitably introduces the potential for error during putaway/replenishment and pick
Training & Development – can it wait? Literally, and whilst this perhaps jars with company values can some types of training be deferred until calmer waters are on the horizon?
To this end, there is news recently of large corporations stopping their graduate intakes which is a broadly similar outcome
SKU level profitability is an interesting aspect but one needing analysis – range width vital to attracting customers versus is each SKU available online contributing? Is drop shipping an option?
Returns – an industry in itself and not perhaps something tackled with short term tactics but needs trend and root cause analysis as a minimum to identify opportunities for reduction.
There’s another route to explore as well – deploy Vitesse = self funding productivity software that helps to increase productivity and reduce lost and unaccounted for time.
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