The Secret to Making Cost Reduction a Strategy for Growth
In an earlier article, I spoke about two moments in an organization’s lifespan that test all the skills a manager has: when there’s growth and when there’s cost reduction. Today, we’ll be talking about cost reduction.
Froylán Campos from Deloitte Consulting explains to us that, according to a recent Deloitte study about this topic, 96% of managers in Latin America have established cost-reduction initiatives for 2018 and 2019. The two main drivers for cost reduction were related to increasing income and sales: 53% of respondents sought a competitive advantage, and 46% emphasized the investment required to grow. But the rest of the drivers for reduction were merely defensive: “The paradoxical approach that considers cost and growth at the same time reflects a mindset of saving to grow, in which companies use their cost savings as a strategic driver to finance their efforts and growth initiatives without sacrificing their profitability. The potential of this approach is immense; however, the biggest barrier to success, according to 53% of the managers surveyed, has to do with the challenges of implementing these initiatives. The key is to move from tactics to strategy.”
In this sense, Campos points out that beyond common cost-management tactics such as cost reduction and savings in business processes, more strategic initiatives must be put in place, such as outsourcing, centralization and business reconfiguration by incorporating new technologies: “With a series of new technologies such as Robotic Process Automation, Analytics, and Cognitive Technologies aimed at modifying the traditional way in which businesses are managed, cost reduction is no longer just a tool used by companies in times of crisis, but rather a strategic catalyst for growth. ”
For this reason, Conciliac is not only an intuitive and easy-to-use RPA tool, but rather a solution that can be implemented quickly and with little time and few resources, which allows organizations to go from a traditional and defensive cost reduction to doing “more with less”, that is, to implement a strategy for growth. Since employees that are in charge of reconciliation tasks have a huge learning curve both in the business and internally, they are experts in specific processes. So much so, that with the right training, they would be empowered and turned into expert analysts capable of identifying deviations, errors, trends… in a short time, the company would count on the business acumen that is so needed in organizations to properly grow.
One repetitive, but complex and indispensable task that is rarely automated, for example, is the reconciliation of the accounts payable records in the ERP with suppliers’ invoices received in PDF files. For Conciliac, this task simply means configuring your module to load Smart Extract & Load (SEL) information, so that you can identify the relevant information in the suppliers’ PDF files on the one hand, and on the other transform the ERP file into analyzable records. When this configuration is done, you just have to add the rules using the powerful Conciliac Recon Software engine, which allows you to build effective logical rules to find matches between records from different sources, so that they match the data between the information as it is recorded in the ERP and the detail of the invoices. What would usually take days and weeks can be done in minutes. The proof of concept of a process can be built in hours.
In this way, organizations can transform traditional cost reduction into a catalyzer for growth. And Conciliac is there, to accompany and guide companies in this paradigm shift.
Author: Conciliac Team
Froylán Campos, “A Paradoxical Strategy: Saving for Growth”, April 2018, Forbes México