|
The Next Generation of Cost Savings
Doing more with less…
The job description of senior financial decision makers used to read; grow revenue, fund innovation and
expansion, cut costs. For many companies today revenue growth has slowed but cutting costs and
funding innovation and expansion has remained mission critical. Every financial decision maker feels like
they have squeezed blood from a turnip. They’ve cut, optimized and right-sized. Everyone is looking for
the next generation of cost savings.
Sometimes you have to dig a little deeper…
Non-core spend, also known as indirect spend, is simply purchases not related to the finished product.
Major categories of non-core spend include logistics, marketing services, accounting services and
plant/facility management. In spite of its label as “non-core”, these spend categories represent upwards
of 20% of a typical company’s revenue. There are multiple savings opportunities within these categories
that are often overlooked because they are a few layers down from the executive suite and are
fragmented across multiple business units. In addition, internal procurement teams generally source
non-core buying categories only once every two or three years, versus multiple times per year and may
miss real-time market adjustments that could yield interim savings.
Facility and plant management, in particular, generate the worst kind of expense in the eyes of senior
financial decision makers. It is an indirect expense, not related to providing goods and services that
generate revenue. Generally uncontrolled and misunderstood, budget calculations are often based off
of previous years’ expenses, creating a continuous game of catch up as expenses outpace budgets. As
the disparity increases, it becomes more difficult and expensive to understand and control the portfolio.
The business unit owners (in our case, facility teams) will typically resist efforts to apply the level of
scrutiny necessary to carve out savings opportunities that reside below the surface – either out of desire
to maintain a financial and procedural status quo or because they believe their internal procurement
and finance organizations don’t have the specialized functional expertise required to satisfactorily
support them.
That’s where we come in…
For over 10 years, Solus Industries, the market leader in facility portfolio planning and asset
management, has formed strategic alliances with some of the most recognizable Fortune 500 names,
and has identified and delivered on hundreds of millions of dollars in spend reductions on behalf of our
clients. Our spend-intelligence program combines the management of operational events, data
collection, extraction, enrichment, classification, analysis and reporting to determine patterns and
trends and implement actions all designed to identify and remove additional spend from your facility
portfolios. Solus Industries is the next generation of cost savings.
|