New research from PA Consulting shows financial services and transport organisations have a significant opportunity to reduce costs
As organisations look to position themselves for the future following the COVID-19 crisis, research from PA Consulting, the global innovation and transformation consultancy, shows that leaders across sectors have an untapped opportunity to significantly reduce costs in their organisation.
With GDP forecast to contract across the globe and as organisations grapple with the challenges of the COVID-19 crisis, the process of removing costs from organisations has never been more important. PA’s research, which is based on a survey of 180 industry leaders across ten sectors, demonstrates that every sector has an opportunity to optimise costs and create competitive advantage. The automotive sector remains the best performing sector in terms of cost optimisation.
Sector cost optimisation performance by rank:
According to PA’s research, six dimensions are vital to optimising costs: strategy, organisation and governance, processes, tools, competencies and skills, and methodologies. Falling short in even one area can limit an organisation’s overall success on a sustained basis.
PA’s research identified that the weakest areas across sectors are strategy (a comprehensive vision for managing costs sustainably) and methodologies (methods for benchmarking cost reduction). This is concerning because both areas were also deemed to be among the most relevant to success. Their relevance and current weakness lead to cost-out efforts underperforming.
There are three key steps for improving cost-out results:
Shanton Wilcox, Global operational improvement and manufacturing expert at PA Consulting says: “A new ‘always-on’ attitude to cost optimisation will help organisations emerge stronger and ready for the challenges ahead. Done well, cost optimisation doesn’t just protect organisations during uncertain times. It identifies ways to increase margins, gain new product insight and unleash innovation. It presents an opportunity to rejuvenate an organisation – increasing collaboration and empowering people to cut costs in creative ways. It changes the way organisations think about costs.”