Posted by: Jeri Denniston | October 11, 2008

Discover Hidden Costs in Your Business

Look at the processes in your business. Are they all necessary? Are you doing things because they’ve always been done that way? Or are there opportunities to change or eliminate some processes altogether because they’ve become outdated or irrelevant? It’s time to take a hard look and see where you might uncover some hidden costs and discover new-found savings.

While it may be possible to organize this process internally, we find it’s often beneficial to bring in an outside, independent facilitator/consultant who can coach and guide the process.  Invite a cross-section of your staff, from senior executives to the lowest level person to a 2-day off-site meeting. Make sure you have representatives at various levels from all areas of the company.

During the two days, you will have each person work individually and in cross functional teams of two or three to look critically at the work they do every day and write down non-essential tasks they perform that could be done differently or could be eliminated or transferred to another department where it makes more sense.

They will explore opportunities for time and work savings in four areas:

  • individually
  • within their departments
  • within their divisions
  • inter-departmentally

We did this with a mid-size  feed manufacturer and they found $1.75 million in savings the first year with an ongoing cost savings of $2.2 million annually thereafter…without cutting jobs or adding investment to the company. Within the first 3 months after completing the two-day workshop, they had already cut costs by $600,000…well on their way to surpassing the anticipated $1.75 million.

This inspired the CEO to hold another session with another group of 30 employees, this time involving the sales team. That group found another $1.85 million in savings and are beginning to implement those.

This example was with a company of about 230 employees, but the exercise can be accomplished with smaller and larger organizations. A side benefit of the process is that the employees are motivated to continue looking for cost savings and streamlining their work, especially if a good reward system is established to encourage ongoing creative thinking.

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