You know from experience that controlling costs and increasing profits for your organization takes more than just creating a budget, regularly analyzing it for variances in projected vs. actual spending, then making adjustments.
You may have tried shopping around for new suppliers, renegotiating vendor contacts, adjusting production levels, re-evaluating your real estate profile or even eliminating employee overtime.
Each of them can be effective moves for controlling costs, but here are some strategies you may not have considered.
Shoring up these areas key to controlling costs
For better control over expenses:
- Evaluate the management of major projects. It’s likely that you’re huddling with project managers before projects begin to set budgets, and you’re reviewing the total costs incurred afterward to see what went right and what didn’t. But are you also monitoring project expenses along the way? Asking questions about spending as the project progresses could potentially save thousands of dollars. You may learn about elements of your resource planning process that could use improvement, and you can make adjustments as you go to preemptively save money.
- Optimize inventory management. While you always want to have enough inventory in stock to fulfill orders quickly, excess inventory drives up costs and can end up as waste (especially if a product has an expiration date). Can suppliers offer “just-in-time” delivery to help you reduce warehousing costs? Would your vendors be willing to keep the title to their inventory until it’s sold? Have you automated your inventory management process? For inventory management software reviews from BetterBuys.com, click here.
- Proactively reduce emergency equipment repair or replacement costs. Consider the time, money and productivity that can be lost if there’s a crash caused by outdated tech in your office or a production line grinds to a halt because a faulty machine broke down. What does your IT and maintenance staff have to say about the condition of the tools and equipment your people use every day? Spending a little more on upgrades right now can keep you from losing a lot more money later.
- Consider using zero-based budgeting. With a zero-based budget, you start from scratch and are forced to justify each operating expense and set limits before putting it in your budget.