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What does an organisation aim to achieve when embarking on cost saving projects ?

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What does an organisation aim to achieve when embarking on cost saving projects ? and how can this be achieved without compormising quality or saftey? and how can cost saving culture be entrenched into tthe organisational work culture.

Contract Management
Cost Management
Profit Maximization
Organizational Leadership
CFOs
Evans Iyamu
more than 1 month ago

3 answers

2

I've been in many organizations & situations where Sr. Management interpreted this differently.
The worst imposed unreasonable restrictions on employee decision making, tightened financial controls on things like expense accounts, or cut headcount & programs that improved employee morale, all in the name of cost savings. see https://en.wikipedia.org/wiki/Albert_J._Dunlap
The best looked at the long term and used programs like 6 Sigma to focus attention on sustainable cost savings projects and encouraged the best ideas to float to the top regardless of the source of that idea. Lower levels in the hierarchy get recognition and technical support to fully explore rough concepts and implement them.
Luis has and excellent definition of cost saving's positive objectives. Improving employee and overall productivity, reducing raw materials used and improving yield are the usual methods to get there. Having competent process experts to explore the best ideas and determine the potential ROI is what some organizations lack in today's environment.

Len Keck
more than 1 month ago
Thabk you Len, the case of Albert Dunlap is a classic example which cost controllers, CFO`s etc of organisation should learn from. Implementing Zero Based Budgeting and other efforts to reduce cost should be done ethically whilst observing all due regulationsetc.'Thank you for your thoughts. - Evans more than 1 month ago
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Evans, a cost savings project aims to reduce all activities, materials and personel that does not, directly or inderectly, add value to the final client. Quality and safety are usually major added value to the final client and reduce its levels only reduce the value that is sold in the end.
Change in culture demands a change in the people's behaviour what demands a proper communication to trigger and sustain these changes. In order to do this task, I recommed you to whatch Simon Sinek TEDx video "How great leaders inspire action" and read his book "Start with Why".

Luiz Junqueira
more than 1 month ago
Thank you Luiz, In my experience driving cost reduction programs, it has been ochestrated by different reasons. There were times it was to boost profitability, at oher times to meet up with corporate annual goals and sometimes to mirror lost in revenue to to several factors. It is instructive to add that on many occassions this takes can take a lenghty period to acheive. - Evans more than 1 month ago
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Cost savings projects should be included in a product life cycle plan using tools such as but not limited to lean 6 Sigma or Toyota Production System. Being part of the total plan allows the cost savings culture to develop organically within the organization and not like a forced last minute reactive response.
Unfortunately, what sometimes happens is that cost saving measures are used as a band aid when the original optimistic business case isn't happening as planned.

Philip Tuet
more than 1 month ago
Thank you philip for your insight , looking at cost savings from a Zero based budgeting perpective, noting that this is usually a forward thinking approach - How can it be a useful tool to managing or reducing cost ? - Evans more than 1 month ago
Lean 6 Sigma and TPS have tools that focus on reducing waste (time, materials, non-value add efforts). Using these tools creates a culture where costs are reduced in an on going basis. Here's a link for illustrative purposes - http://www.toyota.com.au/toyota/company/operations/toyota-production-system. - Philip more than 1 month ago
Dear Philip, Thank you for your input. Regards. - Evans more than 1 month ago

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