Archstone Consulting's Study Finds That 57% of Companies Haven't Yet Identified Sufficient Cost Savings in 2009.Annual Cost Management Study Shows Companies Are Drastically Shifting Away from Traditional Tactics to Realize Cost Savings STAMFORD, Conn. -- Archstone Consulting, a leading management strategy and operations consultancy, today revealed in its annual Cost Management survey that 57% of the companies have not yet identified sufficient savings opportunities to meet the cost reduction targets necessitated by the dramatic economic decline in 2009. The survey was commissioned to understand the cost reduction targets companies have established, areas of focus to realize these savings and the challenges companies face in implementing their respective strategies. While the respondents reported a high rate of success in cost reductions last year, companies are drastically shifting cost reduction tactics as they search for incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. savings. The survey found that in 2009, companies are turning increasingly to the use of more complex initiatives, such as logistics redesign (+11%), shared services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. (+9%) and asset rationalization rationalization, in psychology: see defense mechanism. (+9%), in order to realize their cost savings goals this year. Furthermore, respondents of the survey expect a decreased use of discreet tactics including restructuring (-11%), overhead cost reduction (-6%), off-shoring (-5%), and strategic sourcing (-4%). "Our prior cost management report concluded that 86 percent of companies surveyed said cost reduction initiatives were an integral part of how they operate. However, as companies face this new economic environment, they are relying less on traditional cost reduction measures and are searching for more creative options," said Todd Lavieri, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Archstone Consulting. "Companies today have to act very aggressively to protect their profits -- they need to review their previous cost reduction plans and reexamine re·ex·am·ine also re-ex·am·ine tr.v. re·ex·am·ined, re·ex·am·in·ing, re·ex·am·ines 1. To examine again or anew; review. 2. Law To question (a witness) again after cross-examination. the savings opportunities that were left on the table in 2008." David Wireman wire·man n. 1. One who works with electric wiring. 2. Slang One who taps telephone lines; a wiretapper. Noun 1. , Principal and Operations Improvement Practice Leader at Archstone Consulting added, "Respondents reported they will also be looking to reduce Engineering, Research and Development and Customer Service costs, areas that have traditionally been left untouched by cost reduction efforts, indicating the pressure companies feel to find every possible cost reduction opportunity this year." Further Opportunities for 2009 As companies strive to step up their cost reduction efforts and tap into hidden pools of cost in 2009, many companies are seeking to find the next level of cost reduction opportunities. Survey respondents identified the following challenges that prohibited companies from realizing their 2008 goals. These challenges, when addressed, represent unrealized, untouched and unrecognized opportunities for 2009: * Implementation delays and a lack of resources. * Upfront investment requirements, regulatory implications, risk to quality or customer service, and potential revenue impact. * A lack of cross-divisional and cross-functional visibility, divided focus, and the lack of bandwidth and analytical capability, as well as difficulty in tracking "soft" savings. What Does It All Mean? As a result of the study, Archstone Consulting concluded that successful companies are rapidly responding to cost and cash pressures with aggressive internal "SWAT" teams. "Companies are quickly mobilizing mobilizing, v 1. freeing or making loose and able to move. 2. observing any ongoing movements in a client's body, whether small or large, assisted or not, that identify strengths and weaknesses, as well as the client's physical and internal teams to initiate fast, sustainable cost reduction and working capital improvement programs to help maintain or improve profitability for this year and beyond," said Mr. Wireman. "They are consciously searching for hidden cost reduction opportunities by tackling areas typically considered out-of-bounds in the past and they are trying to capture planned but unrealized savings from past efforts." Archstone also identified the top lessons companies can learn from this study about successfully achieving cost reduction targets: * Increase accountability for successfully completing initiatives and achieving the anticipated results * Improve program management capabilities * Target near term efforts * Ensure financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against and control * Incorporate structural improvements into broader strategy * Improve talent management and review A full copy of the survey report can be obtained by visiting: http://www.archstoneconsulting.com/ThoughtLeadership/Research/Default.aspx. About the Survey The online survey based its findings on the responses from 50 executives in various industries including Consumer Goods consumer goods Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and , Healthcare & Life Sciences, Transportation & Automotive, Other Manufacturing & Industrial, Retail, Aerospace & Defense, Technology & Telecommunications, Media & Entertainment, Energy & Utilities and Service firms. Additionally, 28% of the companies surveyed had revenues greater than $5 Billion. For further details on the study findings, please contact David Schutzman at dschutzman@archstoneconsulting.com or 203.940.8221. About Archstone Consulting Archstone Consulting is a leading Strategy and Change, Operations and CFO See Chief Financial Officer. Advisory management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects firm, specializing in the consumer products, retail, life sciences and general manufacturing industries manufacturing industries npl → industrias fpl manufactureras manufacturing industries npl → industries fpl de transformation . Archstone Consulting helps companies restructure and reduce their costs, while improving their business processes and operations. Headquartered in Stamford, Connecticut Stamford is a city in Fairfield County, Connecticut, United States. According to 2006 Census Bureau estimates, the population of the city is 119,261, making it the fourth largest city in the state. , Archstone Consulting has offices in Amsterdam, Chicago, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden and Toronto. For additional information, please visit us at www.archstoneconsulting.com. Keyword Tags: Cost savings, outsourcing, cost management, cost reductions, economic decline, overhead, restructuring, logistics redesign, shared services, asset rationalization, saving opportunities |
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