E-impensa Cost Savers for business

Cost Management and Supplier Reduction

 

kenhoward@e-impensa.com

info@e-impensa.com

Tel 01206 625427 or 07581 856331

       Cost Management/Cost Reduction & Supplier Reduction

 

                                 

 

 Cost management is the process by which companies control and plan the costs of doing business. Individual projects should have customised cost management plans, and companies as a whole also integrate cost management into their overall business model.

There is no single accepted definition for this term, because it has such broad applications and possible strategies. When properly implemented, cost management will translate into reduced costs of production for products and services, as well as increased value being delivered to the customer.

For a company's management to be effective overall, cost management must be an integral feature of it. It is easiest to understand this concept if it is explained in the context of a single project. For instance, before a project is started, the anticipated costs should be identified and measured. These expenses should then be approved before any purchasing occurs.

During the process of completing a project, all incurred costs should be noted and kept in a record of some kind, to help ensure that the costs are controlled and kept in line with initial expectations, to the extent that this is possible.

'' The small changes e-impensa carried out enabled us to increase our payment terms and reduce aged debts ''

In an economic downturn, most companies take the wrong approach to lowering their supplier costs.

They tend to seek an across-the-board, per-unit price cut and they end up clashing with suppliers who are facing business challenges of their own and simply can’t drop their quote any lower.

With anything from 20-40% of their operational spend tied up in the supply chain, it’s no surprise that companies want to closely manage their costs in this area.

'' e-impensa's remit was to increase our payment terms, they went above and beyond this ''

We believe the answer is to look beyond the transaction price of a part or service and instead examine the total cost of doing business with suppliers. To lower over cost structures companies need to focus more strategically on structural improvement. Often, there’s plenty of inefficiency to drive out in other areas for example , overheads, warehousing, logistics and the cost of quality. Other areas of interest are manpower resources , change management , re negotiation of contracts , payment terms and conditions and finally ‘the way we do business’.

At the initial brief , e-impensa will ensure that they document all aspects of the project. We may ask for some confidential information and we may require various resources and documentation however what we extract from the meeting will be kept confidential at all times.

To see an overview of Direct and Indirect cost structures - Please click here