Analyse Overheads – Don’t just Dispense of Them

It has been an important approach which I utilise in a business review specifically to bring it back into sustainable profit. That is to be strategically progressive in the review of methods and control procedures in operational support departments. I see this as a means to continued prosperity and growth of an organisation.

Keeping office support services streamlined yet effective to provide all information necessary for the sustainable operation of the business as a whole.

I see this strategic task as the only way in which overhead costs can be minimised and the productivity and other needs of management truly satisfied.

Changes in the scope of the business and in particular, considering the markets it services, or in the competitive arena it operates can determine the real changes needed. When you take into account technological advancements over the past decade, and what can be expected to evolve over the coming decade, it stands to reason that significant changes will be achievable in the overhead structures.

To analyse current operations, there must be a strategy to evaluate the relative importance of all procedures which will provide a value adding understanding of the magnitude and significance of the tasks and how they truly add shareholder value to the processes which support the product being sold.

It is only when all of this data has been accumulated and considered will it be possible to determine how the change strategy should be prepared and how it can successfully be implemented.

If this review is to be successful, there will be a need to gain an overall appreciation of the organisation, including the relevant significance of the employees and the roles they play.

As I have stated on a number of previous occasions. When reviewing overhead structures and opportunities for cost reductions, it is not all about ‘The Quick Overhead Fix’. Not an academic approach to quick cost elimination which will make the bottom line look good over the fiscal period, but after that, the wheels will fall off due to a loss of expertise and employee motivation.

As part of the ‘Best Practice’/’Lean’ approach, if you adopt the policy of the ‘Identification & Elimination of Waste’ through the involvement of all employees, it will be amazing how much cost you can eliminate from operations.

Any aspect of the business which adds cost to a product/process which is not paid for by the customer, should be looked at for elimination. There must be no ‘Sacred Cows’ in this review process. Everything must be open to scrutiny.

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