Eliminating Unnecessary Costs During COVID-19
No matter the industry or country, many companies have been forced to make necessary cuts to survive the COVID-19 pandemic. This crisis has been devastating to the global economy on a scale the likes we haven’t seen since the Great Depression.
Unfortunately, you already knew that. Thousands of enterprises across manufacturing, logistics, and wholesale industries have considered everything from hiring freezes and eliminating travel to delayed purchasing that isn’t absolutely essential to a business. So, the question becomes, what are businesses to do now?
Going a few steps beyond those common cost-saving initiatives outlined above, there are additional ways that companies can manage to eliminate unnecessary costs in these unpredictable times. So, what should you do now?
Consolidate, Consolidate, Consolidate
One such avenue that companies can take to trim some unnecessary expenses is to look at how they can consolidate their in-house technologies. Like many Cleo customers, you are more than likely periodically looking for ways to save money by consolidating your technology systems. Instincts likely are causing you to shut down any conversations that involve signing a new vendor agreement or even making an add-on purchase.
However, that might actually be a bit shortsighted. Why? Well, for starters, while nobody knows how long the economic recovery will take, having control over your long-term integration technology initiatives and strategies is what you need to be thinking about now. The sooner you do so, the sooner you will start reaping the benefits and come out the other side more well equipped to handle any supply chain disruption that comes your way.
Third Party Services
Another common recurring fee that enterprises are accustomed to are premium fees on EDI transactions or the need to support integrations with all of the members of their digital ecosystem partners. So now is the time to evaluate any potential third-party service providers to see if there is a way to save money on both. With the market in such flux, there are going to be some deals out there that companies can take advantage of. Don’t hesitate.
Cost or Price?
Next, companies must ask themselves this simple question, “What is more important to our business – cost or price?” Believe it or not, there is a difference. When we say ‘cost’ we mean the long-term expenses associated with a particular service or product. When we say ‘price’ we mean the one-time expense that you might have to incur in order to gain some long-term value, such as cost savings.
Many times, enterprises focus on price because the satisfaction is immediate, such as a one-time price discount, or zero price increases. But the reality is different. The reality is such that price often interferes with our ability to gain something much more valuable to our business operations over the longer term. Price also prevents businesses from analyzing the cost of *not* doing something, and over time, that could end up costing more than any investment.
Bottom line, it’s not unusual for enterprises to be evaluating any and all potential cost savings as they work through the COVID-19 transition. But it’s not about cutting costs for short-term gain, although that might make management feel good. It’s much better for companies to use this time to examine their business and find ways to discover and create value. In listening to our customers we are hearing from many companies who believe that strengthening integration technology will in turn strengthen supply chain continuity, which in turn can strengthen the very mission-critical business relationships their company’s success depends on.
It all comes down to doing what you can to achieve the most agile supply chain possible. Any strategy that directs your business to that goal is well worth exploring during this transitional time in business and life.
Refer to Cleo’s COVID-19 FAQ guide for more suggestions to help you navigate these difficult times.