Neill Summerfield, director of the Leeds franchise of Expense Reduction Analysts has worked with automotive engineering group Finnveden Bulten in order to save its UK base £165,177.
The reduction have come through simple steps to challenge business costs and has been instrumental in helping the firm through the recession.
Here are Neill’s top 10 tips on how manufacturing companies, whatever the industry, can reduce their expenditure.
Tip 1: Have a thorough review – This is the first action I take when working with any new company. Many companies decide to cut costs but don’t carry out a thorough review first, then end up making make rash decisions that might not be the most effective cost savings in the long run.
Tip 2: Make a list and prioritise – After conducting a review, I list every element of expense within the business and look at the ROI of each of the costs. This will help make clear which expenditures to cut first and which elements drive the business forward and shouldn’t be cut.
Tip 3: Listen to staff – After recognising potential cost savings I always speak to staff about their thoughts on the elements I believe could be cut/changed. They might agree or point out a reason why the expense is vital to the company that you hadn’t recognised or full appreciated before.
Tip 4: Be Objective – Weigh up all options and look at the issue from all areas of the business before making the decision to cut or change supplier. No decision should be taken lightly and without thorough thought.
Tip 5: Shop around – I find businesses stay with the same suppliers for years due to lack of time to ‘shop around’, but this time can equate to large cost savings. I always believe what was the best deal 5 years ago, probably isn’t now, so look at what other suppliers can offer.
Tip 6: Negotiate – Suppliers across all sectors and industries want your business so barter with them. I believe it’s a buyer’s market out there so businesses should use that to their advantage. Don’t automatically take the first offer, keep going back to each telling them you’ve been offered a better price.
Tip 7: Take Control – Many companies allow staff to make purchasing decisions but managerial control is vital to ensure costs are kept to an absolute minimum. If this is not possible all purchases need to be visible through statements and receipts.
Tip 8: Read the small print – I find businesses often get stung as they haven’t fully understood the legalities behind contracts and agreements with suppliers. Always read the small print before signing any contract and seek advice if unsure. If something looks to good to be true, it usually is!
Tip 9: Keep up to date – Technology is evolving as fast as ever and there are always new ways of making tasks quicker and easier. Consider different IT packages as these can make HR jobs such as wages and invoices much simpler, leaving more time to drive the business forward.
Tip 10: Don’t cheapen your business – This is one of the most important issues that I discuss with my clients before any cuts are made. In difficult economic times cutting costs might seem like the only way to survive, but never make any decisions that will impair on the quality of your business or services. It’s just not worth it.