Mature organizations that have surpassed their growth cycles in the market and have reached their saturation point can be differentiated on the basis of cost. Of course, time and quality are the other important parameters. However, since most of the machines, equipment, resources and raw materials are common amongst competitors, cost becomes the final decision-making factor in the mind of the customers in such saturated industries.
The Cost Reduction approach of PBOPlus Business consulting is centered around such businesses. When focusing on cost, there are multiple headers under which it can be reduced. These headers can cost in terms of material, manpower, maintenance, overall production, tools that are being utilized, energy and loss of material or products due to bad rejections. And, under most of these headers, we have a solution developed in place.
Cost is one of the omnipresent parameters in every organization. Hence, for any business to be profitable, it is not only important to focus on revenue improvement but also to fundamentally keep its cost low. This allows the availability of more profits that can be later re-invested into the business. Additionally, it becomes easier to keep the overall cycle of debts lower than costs and costs lower than revenue.
Cost Reduction in businesses is an end - to - end parameter that involves cutting across functions and departments without compromising on the end results. We practice the science of cost reduction as a form of discipline.
For achieving a reduction in any cost, we rely on our 7 Chakra model. Although, we firmly believe that the model also helps in improving organizational effectiveness. Through certain key features, such as multi-functioning team, process design and adherence and 3-layered structure, we are able to achieve significant savings for our clients (up to 30 percent) in terms of cost reduction using 7 Chakra.
We additionally define clear 3T SOPs which is a tool to improve the cost of the entire value chain. Both 7 Chakra and 3T SOP are affordable ways of implementing solutions that improve cost accuracy and reliability in processes as well as machines.
Our second approach when talking about cost is to reduce it between 30 - 50 percent. However, such a reduction is tougher to achieve only through 3T SOP and 7 Chakra. We take up technology as the way to achieve cost reduction in this range. The medium through which we do it is ERP/BPI. Besides improving the decision and information flow within an organization, ERP/BPI is also utilized to optimize the number of people required to execute a process. This is how we are able to push the limits of cost reduction between 30 – 50 percent.
Cost reduction beyond 50 percent and all the way to 80 percent requires more physical or hardware based technologies. Complex processes require intelligent analysis and decision making skills along with the rapid physical and mechanical movement. Hence, we use technologies such as IoT, Industrial Automation and Robotics for such complex processes. These investments are capital intensive and should only be taken up after proper hardware analysis.
By utilizing these tools we are able to focus on distinctive processes such as Order to Dispatch, Procure to Pay, Manufacturing, HR or any other shared services. We are able to apply these tools to each of the fundamental processes to improve cost – related parameters within each of them respectively. For instance: