How to make a cost reduction plan in the company and 7 examples that can be applied – WAU
Competitiveness is increasing in the market, so your company needs to find ways to optimize its performance to win the attention – and resources – of consumers. The initial part of this task goes directly through the execution of a cost reduction plan.
The digital transformation has completely changed the way companies need to behave, both externally and internally. In other words, just as the relationship with the consumer needed to be changed, adopting a different look at internal processes also became necessary to be able to stand out from the competition in the market.
In this case, creating a cost reduction plan in your company becomes a fundamental action. After all, how can you remain competitive within your segment if spending on the production of an item or the execution of a service is preventing, for example, the realization of new investments or the offer of more competitive prices?
From a complete analysis of internal processes, it is possible to identify waste and activities that are not generating the expected results. And all of this is put into action when structuring a cost reduction plan. How about knowing how to make yours?
Here, you will learn:
Read on to discover best practices!
How important is it to make a cost reduction plan?
Let’s suppose that your business is standing out within the segment of activity, has been recording satisfactory sales figures, conversions, however, there is not much room for new investments. A new competitor arrives on the market offering more affordable prices and you are forced to take action, right?
Even more correct will be your stance if, to answer the new competitor to the level, your first action is to structure a cost reduction plan. After all, if it is not possible to get more resources from your superiors, the most effective solution is, without a doubt, find ways to cut waste and make better use of budget stipulated.
And this is only possible when structuring a plan that aims to analyze all internal processes and then identify those points that can be cut, replaced or even better used. Only then will you have greater control over the efficiency of your investments and, consequently, greater competitiveness.
After all, this is the big dilemma for companies today: to compete. If you do not strengthen the digital presence of your brand, for example, or do not offer quality customer service, your company will naturally be left behind. And the The only way to guarantee competitiveness is to make better use of available resources.
As much as there are tools and strategies that can be more efficient – or more cost-effective – than those adopted by your company, the initial step is to cut excess. From the cost reduction, the most important benefit is perhaps the greater market competitiveness that your company will be able to perform.
Another advantage of a cost reduction plan is the organization, since your company will anticipate a need, and not the other way around. In other words, instead of having to fire employees, cut trusted suppliers or even lose production quality, you will program yourself to determine the investments that must be rethought.
Therefore, the main benefits of implementing a cost reduction plan are:
- increasing the competitiveness of your company;
- more planning for decision making;
- greater potential to increase the company’s profits;
- products and / or services delivered with more quality;
- financial health of the protected organization.
What actions to put in place to structure this plan?
How about, then, knowing how to structure the cost reduction plan in your company? With some actions, it is possible to organize internal processes and find ways to avoid waste, make better use of the available budget and, as a consequence, make better decisions in search of more productivity. Check out!
Analyze current costs
The first step in structuring your cost reduction plan is to analyze the current scenario in your organization. That is, monitoring your current costs and identifying all expenditures should be your priority. How do you know which processes and strategies can be optimized without prior study of what your company spends on the production process?
The objective is to find, within the essential activities for the delivery of the product and / or service, points that can be improved, in the search for a formula that generates more results. In addition, it is necessary to look for points that can be completely reformulated and do not interfere with the quality of what is offered to the customer.
Set cost reduction goals
With the analysis of current costs ready, the next step must be stipulate goals to be achieved in a given period. After all, this is a long-term job and the entire cost reduction process must be put into practice without being overwhelmed and desperate, always using the objectives outlined to monitor the progress of this process.
Put theory into action
With all these points defined, it’s time to get your hands dirty and apply everything that has been determined. There is no point in finding possible sources for cost reduction if, in practice, they are still there. So cut back on what has been defined and find ways to improve and optimize activities that have not been discarded.
Don’t forget to monitor
In addition, it is important to check regularly that the targets set for cost reduction are, in fact, being met. Monitoring is also important to know if the decisions made are really having an effect, since this analysis will show whether it is necessary to rethink the decisions of the court or not.
7 examples of cost savings that can be applied in your company
Now that you know the importance of making a cost reduction plan in your company and how to structure it in an efficient and practical way, how about checking some examples of contingency that can be applied to your business?
We have separated 7 situations that can avoid waste and make better use of available resources.
1. Plan your inventory well
One of the most efficient ways to contribute to cost reduction is more efficient planning of your stock. After all, this is a fundamental point for any business, especially when it comes to sales.
Inventory is the focal point for providing a satisfying consumer experience, for example.
2. Bet on individual accessories
It may seem like a small reduction, however, to encourage your employees to use individual bottles, glasses and mugs.
Instead of using disposable cups and their fixed cost to supply the demand, you can set aside a budget to distribute personalized accessories to employees, even serving as an endomarketing action.
3. Use the benefits of technology
Software, solutions and tools are increasingly essential for the optimization of a company’s processes and consequent increase in production.
So, enjoy the benefits of technology and count, for example, with a CRM (Customer Relationship Management) tool or an ERP (Enterprise Resource Planning) system.
4. Avoid turnover in your company
Another point that can be improved and is directly related to your company’s organizational culture is the turnover of employees and collaborators. Study and analyze each contract and check if the professional, besides being necessary, has the profile of your organization, increasing the chances of success and the retaining talent.
5. Choose the ideal tax regime
The forms of cost reduction are not limited to the optimization of processes, but also to payments and tax obligations. Taxes can guarantee many headaches and, worse, bigger discounts unnecessarily.
Therefore, choose the right regime – Real Profit, Presumed Profit and Simple National – for your business model.
6. Renegotiate contracts with suppliers
When it comes to renegotiating contracts with suppliers, the work is not just about getting lower prices, but also better payment terms or terms, for example.
In addition, you should be able to assess whether that contract is really good for your business and, if necessary, look for an alternative in the market.
7. Involve your entire team
In times of economic difficulty, it is important to involve as many employees as possible in this planning. In this way, you can count on the engagement of the company’s professionals in this cause, which can provide, in addition to insights and possible points of reduction, they begin to strive more in pursuit of this objective.
So if you want to get the best out of your team, increase productivity in general and use the available resources more intelligently and accurately, the first step is to structure a cost reduction plan. Thus, you will start the process of internal improvements, avoiding waste and maximizing your gains.
Many companies already adopt some practices that contribute to a better use of the budget using tools and solutions that optimize the work developed internally. One of them is SaaS (Software as a Service), how about, then, knowing how to reduce costs with this model of operational structure?