A lack of structure and human resources are the reasons for potential cost saving opportunities to be missed in companies.
Institutions from the public sector have a lot of catching up to do when it comes to cost management. This is a conclusion of the study “Barometer Cost Management”, conducted by Expense Reduction Analysts and the European Business School (EBS) with a panel of 185 companies. Whilst in the industry sectors of transport, financial services and automotive, almost all companies have set up cost management measures, only 57% of institutions in the public sector have done so. In addition, these public sector institutions obtain the lowest values in the key performance indicators (KPIs) of access to external information, application of procurement and controlling tools and staff training opportunities.
The Barometer Cost Management presented an overall value of 63 out of 100 points. “This relatively low score shows that for many companies, there is still a lot of potential improvement in the field of cost optimatisation” says Dr. Arnd Halbach, Director at Expense Reduction Analysts. According to the results of the Barometer, the companies that are very well positioned have an above-average use of process-oriented and updated KPIs, as well as specialised procurement and controlling tools. In addition, these companies have fixed clear value targets for these KPIs. “In the Barometer Cost Management, the KPIs in the fields of information and tools have the greatest impact on companies cost efficiency. The below average values of 61 and 55 indicate that companies need to react” concludes Dr. Halbach.
The Barometer Cost Management also shows that more than 9 out of 10 companies have, in the past 3 years, audited their own expenses and that this is viewed as a top management responsibility.
However, only half of companies are pleased with the outcome. “ The results point out that many companies lack structure and human resources” says Dr. Halbach. According to the barometer, only a third of companies have enough staff and precise timescales. Only 30% of companies have taken measures to offer training to their employees.
To keep their costs down, most companies use tools such as negotiations (79.2%) and cost controlling (75%°). According to the Barometer, the most effective tools are however specialised cost management tools such as Life Cycle Costing, benchmarking, overhead value analysis and process cost calculation. “The most sophisticated the tools are, the more satisfied the companies are with the results” says Dr. Halbach. “It will be very interesting to see how companies will be addressing the subject of cost management in the future, and what impact the economic changes and the euro-crisis have”, continues Dr. Halbach in a preview of the Barometer Cost Management 2013.
Barometer Cost Management
The Barometer Cost Management has been designed by Expense Reduction Analysis and EBS (European Business School) and shows how efficient companies are with regard to cost management. The key fields of “Strategy”, “Organisation”, “Information”, “Tools” and “Culture” were investigated. The Barometer Cost Management helps companies understand what steps they should take in order to improve their cost efficiency. The Barometer Cost Management is conducted annually.