Unlocking Business Efficiency: Exploring the Hidden Levers of Cost Optimisation

Cost optimisation is one of the most used and effective strategies for organisations to deliver incremental value and increase business efficiency.

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Published: 02 May 2024 Updated: 02 May 2024

We believe cost optimisation should drive sustainable change. Opportunities for improving efficiencies, empowering and engaging the workforce, and eliminating wasteful spend are often untapped. Adopting a strategic, holistic outlook enables you to unlock these efficiencies and benefit from significant strategic cost savings.

While most organisations start from supporting functions and rationalising headcount (which most often delivers the highest savings), it’s found that unless supported by more holistic change these are often short-lived, with incremental dilution of the savings leading organisations back to where they started.

By leveraging the power of AI & Interaction data companies can significantly reduce the effort required to gain insight into how work is actually being done. This not only helps identify opportunities for automation and optimisation but also provides valuable insights for better resource allocation, ultimately leading to higher cost savings for enterprises. Solutions like Soroco Scout AI model offer a broad range of benefits across business operations, and according to analyst estimates, the overall interaction data market itself witnessed a remarkable 75% year-over-year growth in 2022, with this momentum projected to continue in the coming years.”
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This article focuses on six of the potential levers businesses can utilise to achieve the cost savings they are looking for.

1 - Improve business efficiency and automation

Business processes build up and increase in complexity over time, through growth and acquisition. Processes are learned on the job and passed on from one person to the next. They become unwieldy, inefficient and outdated, often remaining unchallenged and accepted as ‘the way things have been done”.  Unnecessary steps, bottlenecks, inefficient methods and outdated technology are often hidden within business processes.

By conducting a comprehensive analysis of existing workflows, through process mapping and documentation, we shine a spotlight on these inefficiencies and process redundancies are identified. With tools in areas such as process or task mining, we can scale these discovery stages for large teams spread across several locations. Streamlining and standardising processes can reduce the completion time and effort saved can be redirected to more value-added activities.

Through process improvement, look for opportunities for automation. Embrace these opportunities and prioritise the changes you can make which will have the most impact – the quick wins. Your workforce will feel more valued and more incentivised by the reduction of manual and repetitive tasks, as well as allowing additional time to focus on more strategic initiatives to help to grow the business and reduce the need for taking on additional staff elsewhere. In addition to increasing efficiency, errors will be minimised and process speed increased.

2 - Supplier relationship management

Build strong relationships with your suppliers and leverage these to optimise procurement through strategic sourcing. Through more strategic thinking when sourcing goods and services, and focusing on key suppliers, you can develop stronger supplier relationships and negotiate better terms.

For example, if you frequently make regular or repetitive orders for goods or services (potentially across a few suppliers) consider whether you can consolidate suppliers or make bulk purchases with your key suppliers to benefit from economies of scale and more favourable pricing.

Capitalise further on these strong relationships through supplier collaboration and work with key suppliers to identify any mutual cost-saving opportunities. Through open communication with these key suppliers, you may be able to identify innovative solutions or partnership opportunities which allow both your business and that of your suppliers to flourish.

3 - Energy efficiency and sustainable practices

Although particularly topical at present, energy efficiency is not a new concept. Many businesses, however, would still benefit from carrying out an energy audit which could identify opportunities to reduce energy consumption and improve energy efficiency.

With increased pressure on businesses to demonstrate energy efficient and sustainability credentials, it’s more important than ever to consider investing in energy-efficient technologies and practices. Not only will this minimise environmental impact and improve your business’ credentials but will also lower utility costs.

Depending on the industry in which you operate, waste reduction may also have a significant impact. Businesses, should regularly review waste levels and consider waste-reduction initiatives they can implement, ideally adopting circular economy principles where waste is reduced through reuse or recycling, which will often be viewed positively by staff as well as reducing disposal costs.

For example, surplus food in restaurants being used for staff food, composted to be used in the restaurant’s kitchen gardens, or converted into waste for energy via anaerobic digestion.

4 - Talent management and skill utilisation

The biggest cost to most businesses is their workforce. All too often employees are not given tasks to truly challenge and stretch them, and to make the most of their talents and skills, leading to a demotivated and under-utilised workforce.

Businesses should regularly assess the skills, capabilities and interests of employees alongside the requirements of both their roles and wider business need.

Productivity is likely to improve if you take the time to identify capabilities, strengths and interests of your team members and align these with the tasks allocated. For example, you may have a social media whizz hiding in your accounts team who could support your wider digital marketing strategy.

If you find yourself needing to recruit additional staffing during busy periods, one way to reduce this financial burden is to enable employees to handle multiple responsibilities by providing cross-training programs. This will empower employees to work more flexibly and should reduce the need to employ temporary staff during peak periods as staff can be deployed from other areas within the business.

5 - Technology and IT infrastructure

The theme of embracing technology continues with exploring cloud-based solutions to reduce IT infrastructure costs. They are often more cost-effective and can also provide flexibility and scalability.

Software as a service (SaaS) is a significant spend for many businesses. In fact, for mid-market fast-growing organisations SaaS spend is increasing 25% each year.

It is therefore essential to regularly review this spend to identify savings. For example, do you really need all the licences you are paying for? Does everyone in the organisation need the same functionality within systems, or could some roles trade less functionality for reduced cost?

Real savings can also be made by re-negotiating costs and/or changing suppliers where possible. Leveraging SaaS optimisation software and specialists can also offer significant return on the investment.

6 -Risk management and insurance

Risk management isn’t just a box-ticking exercise. When used properly it can help to prevent potential future losses by identifying areas of financial exposure and putting mitigations in place.

Linked to risk management is ensuring you have the correct insurances in place across the business to be able to reclaim losses or protect the business should things go wrong. It is important to consider the current stage in a business’s life cycle when choosing cover. Whilst key person insurance is important as a startup, loan protection may take over in a maturing business and shareholder protection once a business is well established.

For other, more general insurances, bundling policies or negotiating lower premiums if you have a favourable claims history may help reduce costs.

Summing up

We have covered many hidden levers of cost optimisation across all aspects of the business, many of which will not only save costs but also empower individuals within the workforce. This results in increased business efficiency, a more engaged workforce and the added benefit of reducing recruitment spend.

Sustainable cost optimisation requires a holistic and strategic approach to position your business for long-term efficiencies and ultimately success.

Embrace change and technology and you have the power to unlock these untapped opportunities for cost optimisation.

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