Profit driven by cost savings
The majority of the companies use the savings achieved to increase their profit margin. The top 25% of companies invest the savings achieved up to 46% more in the expansion of their business and up to 34% more in research & development and marketing & sales and less to increase their profit.
Cost savings have short- and medium-term effects
In 73% of the companies the effect of cost saving activities has faded within 3 years. Companies need to put more emphasis on the introduction of a more cost-effective corporate culture, in the identification of the most useful KPIs and in the use of tailored tools to ensure the long-term success of cost management activities.
Based on their annual turnover, companies generate 4.6% additional financial resources from cost-saving programmes
Around a quarter of the companies could even save more than 6% with cost reduction programmes, with the most successful companies from Benelux, Germany, Austria and Switzerland and those from Spain, Portugal – in spite of all the efforts undertaken in cost management – and Italy generating the lowest percentage of cost savings.
The index of the Barometer Cost Management has fallen
The index of the barometer cost management has fallen by 2.5 points in comparison with 2014. Whilst companies from Spain and Portugal are the best placed in terms of cost management, Italian companies have the highest rate of catching-up to do.
Largest saving potentials in Mobility Management
Companies expect to find the biggest savings in mobility management (travel expenses & fleet management). Significant savings may also be identified in the categories of supply chain and telecommunications/IT.
Companies do not use low interest rates to invest more
Also historically low interest rates make money more available, companies have neither changed their investment strategies nor increased the share of credit-financed investments. Only very few companies, mostly from Italy, report that they took advantage of the low interest rates to increase their share of borrowed capital.
Commodities have only little influence on achieved savings
Though the prices for commodities such as steel, energy and plastics have fallen over the last years, this did not play a major role for companies. These expenses are rather seen in an industry benchmark than stand-alone savings. On a positive note – the low prices for fossil resources do not have an influence on companies’ plans to invest in renewable sources.
Companies take a healthy distance with current political development
In spite of current developments like the British vote to leave the European Union, the refugee situation, the armed conflict in the Ukraine and the European embargo on Russia, companies do not change their plans. Changes are seen as opportunities as well as risks.