How to effectively save operating costs

Regardless of the scale of the business, if you want to make more profits and effectively save every penny, it is still very necessary to implement the low-cost principle. "World Ship King" Bao Yugang said: "In the operation, every penny saved will increase the profit by one point, and the savings are directly proportional to the profit." Former Chairman and CEO of ExxonMobil Petroleum Corporation of the United States Mian Mengde is also a model of "cost saving". During his administration, the company was named the most profitable oil company in the world. Cost management no longer simply refers to the concept of direct costs of products or services provided by enterprises plus period expenses proposed by financial accounting, and has been extended to a broad range. The merger and reorganization of enterprises, the development of strategic partners, the acceleration of the adjustment of the industrial structure, the promotion of technological progress, the streamlining of the organizational structure, and the optimization of resource allocation are all listed as "cost savings."

It is here to advocate "effectively saving operating costs." "Effective" means that cost savings should be conducive to the realization of the company's strategic goals, the formation of the company's core competitiveness, and the improvement of the company's ability to create value. "Saving" refers to controlling the cost level in a certain range by grasping from the macro point and starting from the micro point in all aspects. "Operating costs" refers to all the expenditures incurred by an enterprise to provide products or services in a broad sense. The "effectiveness" of cost savings is emphasized because the following misunderstandings may still exist in cost management:

First, the cost is not as low as possible. If an enterprise blindly pursues low cost, but at the expense of product or service quality, response time and other conditions, it may lead to continuous increase in subsequent costs, but weaken the core competitiveness and value creation capabilities of the enterprise.

Therefore, the introduction of the concept of "strategic cost management" by enterprises should become a development trend. If a cost reduction weakens the company’s strategic competitive advantage, it should be discarded. If a cost investment can enhance the company’s competitive strength, it should be discarded. encourage.

Second, cost management is not as fine as possible. All management measures need to consider the relationship between input and output, and under certain conditions of human, financial, and material resource allocation, the cost level can be optimized.

Third, cost management is not just a matter for the finance department. The concept of cost management should permeate all aspects of the enterprise, and should rise to the height of corporate culture construction, system construction, and strategic planning.

Fourth, cost management only focuses on saving, but also on prevention. That is, we strive not to waste unnecessary costs in the production process, and prevent ineffective costs through measures such as improving working methods. For example, reducing waste loss, saving energy, zero inventory, operation analysis and improvement are all within the scope of cost prevention.

In order to achieve effective savings in enterprise operating costs, the following aspects can be considered:

1. Benchmarking

Business managers should establish the concept that everything can be benchmarked. In terms of cost savings, the company has a variety of methods for benchmarking.

Internal benchmarking. You can look for benchmarks within the enterprise, find the grassroots, teams, or individuals with the best cost management performance as representatives, analyze the status quo of cost management, summarize its advanced experience and practices, and comprehensively promote it in the form of "point-to-surface", thereby driving The improvement of the company's overall cost management performance.

External benchmarking. You can also choose benchmarks outside the company in the same industry and across industries. By analyzing the cost levels of domestic and international competitors in the same industry, summarizing the advanced experience of benchmarking companies in cost management, or analyzing what management measures are needed to achieve the same cost level of competitors, detailed in the form of "fishbone diagrams" Explain and implement to achieve the goal of effective cost saving.

2. Value chain management

Cost savings should penetrate all links of enterprise value creation, go deep into the enterprise planning, design, procurement, production, sales and other links, comprehensively and meticulously analyze and control the costs of inter-departmental and inter-departmental connections.

For example, Midea has increased profit margins by developing strategic purchases of supplier partners and reasonably controlling inventory. For Midea, its relatively stable suppliers total more than 300, and its parts and accessories add up to more than 30,000. At present, the annual inventory turnover rate of Midea's air-conditioning products is not only far lower than that of computer manufacturers such as Dell, but also lower than South Korean manufacturers with an annual turnover rate of more than 10 times. An increase in the weekly inventory rate can directly save Midea's air-conditioning costs by more than 20 million yuan. A series of measures have been taken to ensure that considerable profits are maintained under fierce market competition.

Therefore, the scope of cost savings is not limited to the enterprise, but also transcends the enterprise boundary to carry out cross-organizational cost management. The upstream (suppliers) and downstream (customers) related to the enterprise value chain establish strategic partnerships to reshape the cost of the enterprise. Competitive advantages.

3. Refined management

Refined cost management means that in order to adapt to intensive and purchase-oriented production methods, enterprises establish a cost management system of target segmentation, standard segmentation, task segmentation, and process segmentation, and implement precise planning, precise decision-making, precise control, and precision. A scientific management mode of assessment. It is that the enterprise must change the extensive operation mode and gradually realize the stride towards the direction of fine management. Refinement is a kind of consciousness, a concept, a serious attitude, and a culture of excellence.

The implementation of refined cost management also involves all aspects of the enterprise, and requires the cooperation of the financial department and other departments to organically integrate product design and marketing network with revenue and cost control to achieve full participation. Effective tracking and monitoring are implemented in every key link of the enterprise, so that where the business activities of the enterprise develop, the tentacles of cost saving extend to where.

Fourth, process management

Through process optimization and reengineering, the company's horizontal and vertical management responsibilities are more clarified, the key work process of the post is clearer, clearer, concise, and reasonable, and non-value-added parts are eliminated, risks are prevented, efficiency is improved, and cost waste is avoided.

For example, the reduction of corporate procurement costs can be achieved through process optimization. Introduce competition through bidding, give full play to the bidding mechanism between suppliers in public bidding, scientifically and fairly select suppliers that best meet their own cost and benefit needs; reduce procurement processing costs through electronic procurement; through scientific economy Batch calculation reasonably arrange the purchasing frequency and batches to reduce purchasing expenses and storage costs; and select the services and raw materials provided by the suppliers.

With scientific process management as the platform, through the formulation of strict, meticulous and practical work specifications and inspection mechanisms, the responsibilities of positions and internal management processes have been refined and internal management processes have been improved to achieve reasonable cost savings.

Five, standard management

First-class companies set standards. By improving the standards, cost waste can be avoided, and ultimately the organization and management of each unit can be accurate, efficient, coordinated and continuous. For example, the Germans use a special container with a length of four centimeters in length, width and height. A larger egg, with a tray underneath, and then add 50 ml of water. After one minute, the water will boil, then cook for another three minutes and turn off the heat. Use the remaining heat to cook for another three minutes, then soak in cold water for three minutes to make the egg open well. This operation process is actually simple and clear, but it makes the boiled eggs reach the best nutritional value. The same is boiled eggs. The Chinese put the eggs in the pot, and then go out to wash or dry something. When he comes back, he takes a look and feels about himself. If he thinks it is good, he takes it out. There is no standard. reference. The comparison of the results of boiled eggs in this way is that compared with the Chinese, the Germans save 4/5 of the water and 2/3 of the heat, and at the same time, they also make the eggs reach the best nutritional state. This is whether there is standard management. difference. If an enterprise lacks standard management, it may lead to unstable product or service quality, low operating efficiency, and inflated operating costs.

Six, corporate culture management

Enterprises should create a cost-saving cultural atmosphere and pay attention to the subtle penetration effect of corporate culture. Cost savings should be raised to the height of cultural construction and mechanism construction, and a solid cost-saving awareness should be established.

Stuart, a well-known shipping merchant and banker, pays special attention to controlling costs and expenses. He has always insisted not to allow his captain to spend a penny on the company, and he does not allow the person in charge of technical management to pay for repairs directly to the dock because "they have no sense of money." Therefore, the sailors called him a "very annoying and stingy person." Until he established a huge business kingdom, his habit of saving remained.

A senior clerk who has served by his side for many years once recalled: "During the days when I served him, the instructions he gave me were conveyed in handwritten notes. The blank paper he used to write these notes was all paper. He would tear the written paper into a piece of paper and send it out on poor-quality letter paper, and write a line of narrow notes. In this case, a piece of letter-sized white paper can also write three or four highest instructions." A piece of white paper only uses one-fifth of it, and the rest should not be wasted. This is his principle of "if you can save, you can save."

Save every penny and spend the money on the blade. This should be the basic requirement of financial management. Only by continuously improving the adaptability, planning every penny, making good use of every penny, and earning every penny that an enterprise can earn, can the company develop in a healthy and stable manner and be invincible in the future competition. Ground. Peking University Zongheng Enterprise Management Consulting Co., Ltd. is the earliest in China and is currently the largest enterprise management consulting organization in China. It has provided first-class management consulting services for nearly a thousand domestic enterprises, one third of which are domestic top 500 or listed companies, and have accumulated a wealth of Management consulting experience. The company has established extensive contacts with major government departments, industry associations, research institutions, and universities, so that the company has a large number of experts to keep track of the operation of the company's projects.