Companies that are able to reduce costs are generally looked on favorably by the market. CFOs and CPOs who are able to reduce costs will stand out from their peers. Often the solution to reduce expenses is headcount reductions and this can lead to a number of unfavorable consequences. C-level executives want to take advantage of cost saving opportunities and cycle time reductions.
The burning issue is how to incent employees to identify the opportunities. It is no surprise that most procurement teams are running lean. This is a good thing and a bad thing. If your staff is struggling just to meet existing deadlines when will they have time to document better methods? Will they fear for their jobs if they identify cycle time efficiencies that might make it possible to eliminate positions? What if they know about cost savings opportunities but don’t want to bring them up for fear that it will mean even more on their plate?
I know that this is going to come off as a bit simplistic but it has worked for many organizations. Engagement and recognition will drive higher performance. One place to start is simply asking this question: Are there any cost or cycle time savings opportunities that you believe can be quickly implemented? Give a very short window to answer and recommend that they only spend an hour in summarizing their specific ideas. Ask that they estimate the amount of time or hard dollars that each idea could save. Your role in this will then be to respond in the same time frame you gave them.
Take action to implement the easy stuff. Ask management to quickly review the more complex ideas for viability and make sure they keep in mind the end game. You probably won’t be surprised to learn that having better information on a timely basis can drive savings.
Fifteen years ago it could take 6 months to complete a complex RFP – today that same process can be done in 3 to 6 weeks. Yet there are many savings opportunities that are left untapped because organizations don’t share information across the organization or incent their employees. If you knew that other organizations were saving 15% hard dollars and reducing RFP cycle times by 40% wouldn’t you want to know how they are doing it? Would you be surprised to learn that an organization is using an RFP platform for purchases of $1 Million or more and also for $30,000 purchases? Wouldn’t you want to know what platform is that flexible and efficient?
Action Step: What would be a good first step? I would start by asking the question I posed above. Then be ready to take action.
EC Sourcing Group is one of the companies I represent because they help procurement teams deliver quantifiable cost and time savings. If you want to know how, I invite you to request a demo or 30 minute discovery conversation so you can experience the platform, process, people, and tools. Next week I will continue on this same theme so your organization can improve your bottom line. If you would like to know more ways to reduce costs without changing the way you do business simply give me a call or send me an email with your contact information and the best time to reach you.
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Until Next Time, I Wish You Great Success in Your Business and in Your Life