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Cost Reduction Guide Issue 3 Back Office


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Cost Reduction Guide Issue 3 Back Office

  1. 1. Is your business costing you?find extra profit A guide to reducing non-core operating costs in the economic downturn Issue 3: Back Office Supplies Expense Reduction Analysts
  2. 2. Introduction Although not up there with the major strategic business expenditure categories such as marketing, R&D or headcount, nevertheless the systems and supplies that keep your office running day by day can have a significant impact on efficiency and profitability. Whether it’s the cost of equipment itself or It includes tips and advice on the the way your employees use it, a contract following areas: that doesn’t truly reflect your requirements or a culture of waste in the organisation • Photocopiers – are you deriving maximum – all of these can be adding unnecessarily value and efficiency from this workhorse to your expenditure and reducing your of the modern office? ability to streamline the business. • Telecommunications – the array of tariffs, This guide - the third in our series looking at and new technology, products and services different areas of cost reduction - aims to on offer demand a strategic and provide a range of practical advice and well-informed approach examples from experts in the field to help ensure your business is managing its costs • Postage – even in the electronic age, effectively and efficiently. most businesses have a postal requirement but the deregulated market needs careful navigation02 Introduction
  3. 3. PhotocopiersPhotocopiers are one of the most heavily-used pieces of officeequipment, often performing a vital role across a range ofbusiness functions both internal and external. Marketing,finance and general administration departments will allhave occasion to call on the copier and so it’s an area ofexpenditure worth getting right, says expert Brian Pinner.1 Fit for purpose 3 Instil a careful copying cultureIt goes without saying that all office A number of very simple changes in copyingequipment should be carefully selected culture amongst your team can deliverto make sure it performs the functions significant savings:you need it to. However, in thephotocopier market, it’s particularly • Encourage as much use as possible of theeasy to over-specify. ‘duplex’ (double-sided) facility to cut down on paper use. A machine printingConduct an analysis of your actual usage 30,000 pages per month would use 360over the past six months (rather than fewer reams of paper a year if all pagesguessing what you think you need or would were double sidedlike!) and ensure that the machine you • Ensure that the default setting on yourchoose is not too big – meaning you won’t copier is set to mono, with colour onlyderive its full value – nor too small, leading being used if specifically selected. Onto compromised quality and efficiency output. average, mono pages are 90 per cent cheaper than colour2 Review lease and service • Use the print function on a photocopieragreements (most have them these days) rather thanMost companies lease their photocopying a desktop printer for large print jobs. Theequipment so make sure you fully under- page costs for a photocopier will be up tostand the terms of the lease – in particular 70 per cent less than a desktop printerhow long you’re signing up for – and ensure • Check waste paper bins next to copiers andthat any service agreement for the machine printers at the end of each day to identifydoes not last longer than the lease. and curb wasteful or unnecessary printing Photocopiers 03
  4. 4. Telecommunications Telecommunications in various forms have now become an essential part of every organisation, says Brian Holmes. However, since the privatisation of BT and the explosion in the mobile market, the constantly changing dynamics of the market present an ongoing challenge to businesses, which they can’t afford to ignore. 1 Analyse your traffic But without knowing the call Fixed line, voice, data, mobile…your business durations, you have no way of will be communicating in a range of different checking that you’re being charged modes and each may be charged in a at the right rate.” different way or at a different rate. 2 Understand your requirements It’s impossible to be sure you’re getting the Not only is there a bewildering array of tariffs best deal unless you have a detailed analysis available but also an increasing number of of all your usage broken down by category. modes of transferring voice and data to the Crucially, this breakdown should not just be outside world. All of this choice means that telling you the volume of calls within each a simple comparison of rates is no longer category but also the duration per category. sufficient to ensure the best deal. But this may be further complicated by set- up charges, minimum charges and capping. Do you want call capping, bundles or a fixed monthly spend? Will it be via a good old Only by scrutinising this level of data and analogue line, or Broadband ADSL, checking for consistency across different Voice-over-IP (VOIP) or 3G? bills against the known tariffs will you be able to check you’re paying the correct Know what you want in terms of rate in each case. functionality – not just cost - and understand the options available to “Knowing that you made 12,507 calls ensure you select the right one for last month and the cost was £467.32 your business needs. allows you to calculate the average cost of a call at £0.037.04 Telecommunications
  5. 5. Through a lack of resource, a multi-site charity based in the UKwas losing potential revenue by not answering all incoming calls.We assisted by quantifying call volumes and patterns and thentendering to appropriate call centre operations to provide theclient with a range of impartial options to improve efficiency.3 Stay ahead of the game 4 Know the marketAs technologies and services continue to Network operators and suppliers aremerge, the certainty and cost control once constantly updating their products andoffered by a long-term contract is no longer services to take account of the changingas valuable and, in fact, has the potential market. Keeping up to date with theseto lock companies into inflexible or costly developments is a full time job but a crucialarrangements which preclude them from one if you are to be sure of the best deal.taking advantage of the newestdevelopments. It is not unusual for contracts Make sure you have the best marketto have automatic rollover clauses and so intelligence at all times.even though you only signed up for 12months, unless you cancel in time you could A manufacturing company inbe committed to another 12 months. Devon was locked into a cable service provider infrastructureIt is now essential that businesses prepare and believed that its rates couldn’twell in advance of contract renewal dates be improved. Expense Reductionby reviewing communications requirements Analysts negotiated with theregularly and planning strategies which incumbent supplier and realisedavoid incurring unnecessary costs. a 24 per cent saving.Don’t reduce your options by leaving reviewsand supplier negotiations too late. Telecommunications 05
  6. 6. Postage Every company incurs cost on postage. Whilst it’s true that many organisations are making increasing use of email, mail expert Nadim Vanderman says post remains an essential way of sending a whole host of material such as invoices, statements, brochures and marketing material. Here are his tips for making the most of your postal budget. 1 Develop your post profile 2 Pricing In Proportion In 2006, the postal market became With the introduction of Pricing In Proportion, deregulated and the Royal Mail’s monopoly mail is now charged on the basis of weight ended. Whilst Royal Mail is still the and size. Make sure that you don’t send single dominant player, the deregulated market sheets of paper in C4 envelopes. These will be offers a wide range of different products, charged at large letter rate, when they could services and pricing structures from various be sent as letters, costing you 38 per cent different suppliers. more than necessary. With so much choice, the key to managing 3 Be ‘frank’ about your needs your postage cost is to evaluate your situa- Many organisations send their mail using tion and develop an accurate profile of your franking machines. Whilst this is undoubtedly postal usage. You need to ask: how much a flexible way of sending mail, beware of mail is being sent as letter, large letter and hidden costs such as topping-up charges, packet format? How much mail is being sent tariff rate chips and ink cartridges which overseas? How much mail is being sent may detract from their value. Indeed, you Special Delivery? may want to ask the question, do I need a franking machine at all? Armed with this level of information on your usage, you can then assess whether you are using the optimum service for your needs.06 Postage
  7. 7. Expense Reduction Analysts Expense Reduction Analysts is the world’sconducted an extensive largest cost management consultancy andreview of postage costs for focuses on reducing non-core operatinga major public sector costs for private, not-for-profit and publicorganisation with about half a sector organisations.million members. Nearly a yearafter implementation, audits Handling an annual supplier spend ofhave shown a saving of 18 per millions of pounds on behalf of clientscent including, at the last audit, in all sectors, the consultants at Expensethe identification of a major Reduction Analysts use their significantinvoicing error by the Royal purchasing influence to achieve optimumMail which resulted in a five value from suppliers, often successfullyfigure credit note being issued. retaining incumbents and using expert analysis and market intelligence to combat ‘contract fatigue’.4 Get to know new providersWith the ending of the Royal Mail monopoly, Expense Reduction Analysts has 150+there are many new providers in the market- consultants across the UK, specialisingplace. But be careful, as they don’t all carry in more than 100 non-core businessthe full range of services provided by the expenditure categories.Royal Mail and they have minimumcollections quantities. Other topics covered in our series of cost reduction guides include:The most significant difference is that theycharge VAT (postage through Royal Mail is an Issue 1 – Property and Premisesexempt supply), which may adversely affect Issue 2 – Banking and Financefinancial service companies, charities andother organisations unable to recover VAT. For more information contact Expense Reduction Analysts on: 02380 829 737 or visit our website at: 07
  8. 8. find extra profitArgentina Australia Austria Belgium Brazil Canada Chile Columbia Ecuador FranceGermany Greece Hungary Jordan Italy Lebanon Luxembourg Mexico Morocco NetherlandsNew Zealand Panama Portugal Spain Taiwan United Kingdom United States Uruguay Expense Reduction Analysts