FIRMS INCREASE FOCUS ON LOGISTICS TO MEET COST SAVINGS TARGETS
As companies leave no cost-reduction stone unturned, more firms are ramping up logistics strategies and ramping down sourcing strategies as a way to cut expenses.
According to the results of a recent survey by Archstone Consulting, 11% more companies said they planned to use logistics redesign as a cost-reduction strategy this year than last year. Other areas of increasing cost-reduction interest include shared services, asset rationalization and process redesign.
And somewhat surprisingly, fewer companies said they planned to use more traditional cost-reduction methods such as offshoring, strategic sourcing and price hedging. Four percent fewer companies said they planned to use strategic sourcing this year as a cost reduction method while the number of firms planning to offshore to cut costs sank by 5%.
?Respondents anticipated expanding their cost reduction arsenal to include a broader set of tactics in 2009, thus involving a larger subset of the company,? the report said. In short, the survey results are a sign that companies have to explore new ways to reduce costs as the global recession continues to stress bottom-line impact. While 60% of companies are increasing their cost-reduction targets, more than half of companies polled (57%) said the cost-reduction plans they currently have in place will not allow them to meet their cost-reduction goals.
According to David Wireman, principal and operations improvement practice leader at Archstone, survey respondents said they are looking into ?areas that have traditionally been left untouched by cost reduction efforts, indicating the pressure companies feel to find every possible cost reduction opportunity this year.?