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Four cost-cutting strategies to maintain your competitive edge

Greater flexibility, better efficiency or a play for survival: Do you have the tools to strategically cut costs as a means of strengthening or maintaining your competitive edge? While an obvious tactic for any enterprise seeking to sustain or achieve an effective operating model, establishing a successful, sustainable cost-cutting strategy can be a challenge to even the leanest and most successful businesses. This is particularly the case when administrative and operational areas have already been ground zero for cost-cutting measures, prompting the need to explore new avenues for efficiency. Of these, consolidating resources, streamlining technology and outsourcing processes are four provocative trends that offer great potential for cost reduction and increased annual revenue.

When one team wears many hats

The global economic contraction of 2008 and 2009 forced many companies to expect more out of their workforce and third-party suppliers, and in certain sectors the trend toward lower margins continues to this day. For example, the market is demanding cost reductions of 15% or more for the same service in the facilities management (FM) sector, but FM providers tend to operate on an average gross margin of 10%. So while costs are decreasing, they could have an impact on levels of service, not to mention the development of the market.

“It is essential to property owners, tenants and service providers that cost reduction strategies are sustainable, achieving a mutual objective of delivering the right service at the right place at the right time and for the right cost,” says Stephen Beesley, Chief Operating Officer at Transguard Group.

The solution, he explains, lies in the ability of FM suppliers to self-deliver teams of multi-skilled operatives who are trained to perform multiple roles throughout the day. At Transguard, Beesley takes the additional step of encouraging clients to not only adopt best FM practices aligned with the latest market innovations but also actively demonstrating the value inherent in the client trusting the provider. In addition, he consistently underlines the need for the client to trust the capability of the provider: “The more services an FM company can self-deliver on an output-based specification, the more opportunity there is for cost reduction,” he explains.

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One supplier, many advantages

Another potential avenue for increased cost savings is by consolidating multiple services under the umbrella of a single provider. As with bringing in a single skilled team that is versed in multiple roles, a company capable of adding a further layer of technological integration can also help drive savings. This has been particularly useful in the security sector, where savvy companies in the region are experiencing increased operational efficiencies by working with a single supplier to provide security personnel, CCTV systems and more via intelligently integrated systems.  The key, says Transguard’s Chief Security Officer, Tim Mundell, is to identify and work with a provider who can offer “bespoke security solutions that incorporate subject matter experts and technology into one comprehensive security eco-system that is captured and managed under one contract.” Such integration is one of Transguard’s flagship offerings, with a wide range of services specifically designed to deliver tailored solutions. In fact, security consultancy, security manguarding solutions and systems integration with 24/7 maintenance capabilities are just a few of the offerings that have made Transguard the most widely recognised security company in the country.

Harnessing technology

Costs aren’t the only area where significant savings can be achieved – time is also at a premium, particularly for cash-based businesses that are looking for a quicker turnaround in terms of liquidity. In response, Transguard’s cash services introduced Smart Cash Deposit Machine (Smart CDM) technology for corporate and SME clients, which decreases a client’s administrative requirements while providing real-time visibility of their cash balance. “Our customers no longer need to prepare bank deposit slips, arrange and count cash and prepare sealed bags for handover to the Transguard team, thus reducing costs,” says Manu Kataria, Transguard’s Director of Cash Services. “What’s more, Transguard’s ability to streamline also aids the country’s economy,” he adds.

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Outsourcing Personnel and Processes  

Another innovative and strategic improvement that can have a positive impact is the outsourcing of personnel and processes across an organisation. Some companies have adopted a BPO (Business Process Outsourcing) approach to reduce their own internal overheads by outsourcing functions such as payroll, HR, or recruitment. Other companies have implemented a personnel outsourcing strategy by identifying roles that have either a limited time requirement or on a piece work basis and are using a contingent workforce instead of permanent employees. Further approaches have also included outsourcing of permanent employees; however, it isn’t unusual for companies to find that there is often little oversight and alignment between divisions who adopt these outsourcing strategies. As a result, companies are not able to maximise their savings. There is however a centralised management solution says Alex MacDonald, Transguard’s Director of Manpower Solutions. “A consolidated approach to managing an outsourced strategy be it contingent labour, permanent employees, or outsourced processes will decrease costs over time. A Managed Services Provider that has local market knowledge, global best practice systems and processes, including supplier management and ensures transparency and compliance will decrease a company’s costs” adding “that companies working with Transguard as a Managed Services Provider can average savings between 7% and 20% within the first year.”.

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Whether surgically precise or wide ranging, cost management initiatives should never be undertaken at the expense of the quality of service. Instead, innovative integration with strategic partners is the key to continuously pushing the boundaries of service excellence while keeping costs down – and letting your business grow.