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In today’s climate it is critical to control costs and ensure expenditure is finely balanced between operational requirements and quality of service. To achieve this it is important to understand the difference between cost and budget management.
Cost management is the process of continually looking for smarter and more efficient ways of doing business, whilst budget management is more about not over-spending. One of the typical problems with budget management is that it is generally constructed in isolation - often failing to see the relationships with other departments.
Mail costs, for instance, frequently sit within various departmental budgets as a relatively small cost to each, yet collectively they can amount to a considerable sum. By aligning and developing a single solution, it is feasible to save up to 35% of the overall expenditure ... and the same analogy applies to telephone communication costs.
Distribution of parcels is fraught with hidden surprises, e.g. fuel surcharge, remote area, exceeding cube dimensions, poor delivery performance, etc. If not strategically managed, costs can be increased by considerable margins with potentially as much as 50% of distribution spend attributed to carrier contingency.
Another area regularly overlooked is procurement. Contracts are
frequently not managed to the required level and, as a result, companies
lose up to 5%. This is mainly caused by fragmentation between the
incumbent departments, i.e., procurement, operations, legal and finance.
OPS has considerable experience in helping: