Cost Savings Today - 4/2011
European companies analyse their non-core spending on a regular basis. Based on a survey done by the EBS Business School in Oestrich-Winkel (Germany) and Expense Reduction Analysts 83% of the companies confirmed to have undertaken such processes throughout the last 3 years. In total 301 companies from Belgium, France, Finland, Germany, Italy, the Netherlands and Spain took part in that survey.
Based on the results of the survey, energy is the most important cost category to European companies. 43% of all participants named energy as one of the three most important types of costs. Other important cost categories are marketing, logistics, freight and travel management. “Based on constantly increasing prices for fossil fuels and the increasing importance of companies’ carbon footprint companies seem to have a strong focus on energy-intensive costs”, says John Lilley, COO of Expense Reduction Analysts, commenting on the fact that four out of the top-five categories are energy-intensive.
Asked about the utilisation of the achieved savings almost 73% of the companies named the increase of their profit margin. Only 36,7% of the respondents said that they would reinvest the money into existing markets; 17,9% are reinvesting the savings into research and development.In that perspective the study shows that companies that describe themselves as more sustainable more often tend to reinvest the money in the development of new markets and existing markets than others.
Furthermore, the study shows that analysing the cost structure of their operations is a part of the corporate culture in sustainable operating companies. According to the survey cost reduction processes are generally launched as a result of not reaching ﬁnancial goals. Reasons that were given by the participants were that desired profit margins were not reached, the company made losses or were not competitive enough compared to their competitors.
How satisfied companies are with the result of their cost reduction processes is linked to the methods used. Whereas most companies still use standard cost controlling methods for their overhead cost management the highest satisfaction rate is achieved by using specially designed methods like overhead-value analysis; an active comparison of costs via the use of purchasing price analyses or the application of benchmarking with competitors is only done by 43.5 % and 42.5%. “In that perspective the results show that companies do not tend to use the same methodology for their non-core costs as for their core costs”, says John Lilley.
Furthermore, the study shows that employees play an important role in initiating and successfully implementing cost reduction processes. Companies say that it is crucial to engage and inform employees in order to successfully achieve savings.
In this issue
Client interview with the Berliner Seilfabrik: What roused our interest was the success-related remuneration on the basis of the savings realized and the support provided over a longer period of time, p.2
Cost Category Couriers: Package can be sent by more than 31,000 different rates, p.3
Case Study: Raet reduces the costs of office supplies by 36%, p.3
Case Study: Swedish laboratory chain saves 32.000 Euros in Waste Management, p.4
Case Study: International manufacturer reduces cost for telecommunications and officesupplies, p.4
Case Study: Inoxveneta Spa secures 19% savings on its insurance budget, p.4
Cost Savings Today - 3/2011
The Sustainability of Cost Reduction ProcessesOverhead Cost Reduction Processes are Important to European Companies
Cost Savings Today 2/2012
The importance of purchasing is increasing
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