The simple answer is YES and more to it!
The question is rather: Are you prepared to do what’s necessary to accomplish the goal you have on the cost savings?
It’s not a walk-in-the park but I’ve never delivered any customer analysis or project optimalization phase where it hasn’t been possible to save those levels.
An accomplishment that initially sounds impossible and most people don’t believe it is possible either but I can assure you this is possible even if the the prerequisite is that the quality of the business should be at least the same as before.
The simple way about is a few elementary questions
1. Is the business process necessary to reach the final goal?
2. Can the business process be done more optimal without jeopardizing the final goal?
3. What are the consequences of not performing the business process?
By compiling the results from these questions in a holistic perspective including comparing the answers to my 30+ years of experience-database, I very often (read: always so far) come to the same conclusion:
Yes, it is possible if you are prepared to implement the proposals.
I will give you one example (free-of-charge) of an area where I often find relatively large savings:
The Control Environment
Controls are often implemented
a) vertically instead of horizontally,
b) late instead of early,
c) re-actively instead of pro-actively,
d) volume based instead of quality based and finally
e) no clear definition of the goal of the control
f) controls that should’ve been implemented are not implemented due to wrong focus.
A few more words are probably needed to explain what I mean…
In an organization, each Department Manager is often responsible for setting up the controls needed to secure its own responsibility, follow them up and report on them. This is the vertical approach and can be perfect in some cases but if the Dep. Mgrs. decided to sit together and make review of all the controls one would find that it in most cases would be more efficient to look at the same controls from a horizontal perspective. From the Value Chain perspective. From the Business Process perspective.
By doing this analysis one would often find that the control can be done a lot earlier in the life cycle of the process/activity and the earlier you can perform the control and make necessary corrections – the more efficient the process is and the fewer errors. Cost effective!
An analogy; I read a few years ago about a Japanese well known car brand and their quality assurance program. They did not focus on checking the car coming out of the production facility, neither the production of each component. They focused on doing the quality assurance on the process producing the tools to produce the components necessary to build the car. By doing it this way the cost was lower and the final result far better. Something to think about in our world of Funds- and Asset Management…
Everyone are focused on a pro-active attitude but very few are really implementing it. The best place to prove you are doing it is to do so is in the Control Environment.
It is though, important to be aware that it is not a discussion about either of the attitudes but using the right approach at the right place and with the right kind of controls. Example is that the earlier you are able to control your trades the more correct the rest of your value chain will appear. Furthermore, if you have a well implemented Master Data policy you can implement the best quality assurance processes on the Master Data and you have already reduced the number of errors in the rest of the value chain by a large number of percent.
Therefore, identify your Master Data – be rigid about them and implement as many quality policies that gives a positive attribution to your business.
Another example, of good re-active quality processes are the ones you implement to be run during the night hours where the business is not in the real-time mode but in the batch mode. Here you are able to implement your cross assurance the way that gives meaning to your business and prepare your organisation for the day to come. When the organisation is in place in the morning a cross-referenced quality report is ready to investigate – there are always something if you set up the right control environment.
Many organizations write articles about how many quality assurance tasks are being carried out during a production day. The number of quality steps you have doesn’t make sense unless they are the right ones and the organization have trust in the quality assurance kpi’s.
It is important to find the right controls and implement them, whether that is 5 or 50. That is far more important than having 100’s of controls where the analysis shows each and one of them doesn’t create quality value to the business.
Implementing Controls costs money but implementing the wrong Controls costs even more and if you don’t have it, it is just a matter of time before you lose your license to operate.
This picture is not the full picture of how I work with the Control Environment but it gives you an idea of my approach on this particular important area.
Then, when looking at the Value chain it is understandable how this kind of approach in fact can give a substantial attribution to the bottom line. An attribution you wouldn’t get by selling more or cutting costs the normal way.
If you would like to know more, please do not hesitate to contact me here
Experienced Owner with a demonstrated history of working in the management consulting industry. Skilled in Asset Management, IT Strategy, Business-to-Business (B2B), Mergers & Acquisitions (M&A), and Private Equity. Strong business development professional graduated from Handelshøyskolen BI. Founder and Head of The Advisory Group – a less formal, yet more professional than most Board of Directors.
Published 3 books on motorcycle tourism in Norway as well as Founder and Head of Norways largest warehouse on net – varehusetnorge.no
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