Companies that take steps to increase overall efficiencies could unlock significant, additional value, minimising costs and product consumption while establishing greater operational stability. Even the smallest increase in revenue or reduction in expenses can have a huge impact on your company profitability.
But how can you achieve this? How do you reduce product consumption and spend without sacrificing operational performance?
The good news is a large-scale company overhaul isn’t necessary. It’s often simple, common sense steps that improve the bottom line.
Conduct A Thorough Review
It can be easy to decide to reduce costs, but then end up making make hasty decisions that might not be the most effective cost savings in the long run. Carrying out a thorough review first, listing every element of expense within your operational process, will help you better understand the ROI of each of the costs. Having a clear understanding of your current situation will help you make better decisions and help you to focus on how and what you’re going to implement to reduce overall operational expenditure, and which elements drive the business forward and thus shouldn’t be cut.
Many companies allow staff to make purchasing decisions. But when working to reduce operational expenditure and product usage, managerial control helps ensure costs are kept to an absolute minimum. Many companies implement robust procedures to make all purchases visible through statements and receipts – helping identify rogue costs and inflated product usage before purchase.
Though be mindful. A challenge with this method is the managerial time and resource required to monitor, review and approve all outgoings – time which could be invested in general business development and process optimisation. Not only this, the longer it takes, and the more steps there are to approve purchases, the longer it takes to receive production-critical product. Speed is of course a critical factor too.
Your initial review will help you to make an informed decision as to whether this approach would be beneficial for you.
A company evaluating its production costs and product usage may find that employees are not working efficiently or lack the awareness of costs that would allow them to help with reductions. Training employees to understand how the production cycle works and their role in cost reduction makes them part of the solution. When a company trains its employees to be aware of how to reduce costs and informs them of progress, production workers quickly become partners in cost reduction.
Harness Supporting Technology
Technology allows cost reduction in two ways. It allows automation of certain processes, resulting in greater consistency and reduced costs, and companies can use it to better analyse product usage and spend – helping to identify where possible efficiencies can be made.
Stock Management programmes encompass cost controls in areas essential to efficient, cost-effective operation. Implementing Stock Management technology can help you to streamline internal management and ordering processes, track and report on product usage, better understand product costs, identify potential over-consumption of production product and even set order controls.
Utilising this technology will not only help to free teams from manual processes and provide the control required to reduce overall product consumption and spend, but also enable you to easily identify when to resupply to avoid inventory shortages, and also ensure you do not get stuck with excess or obsolete inventory.
Track, Track, Track
You can’t reduce something which hasn’t been recorded. Makes sense right! Once you have implemented stock management technology suitable for your needs, you will be able to track all product usage and associated costs with ease, helping you to identify potential over usage and spend. Implement weekly or monthly reporting to really dive into the data and see where potential efficiencies can be made, or where any problems lay.
Looking to reduce your product consumption and spend? The DTC Hub is the stock management and ordering platform of choice for companies like yours. Visit signup.dtc-hub.com to find out more today.