Cost Reduction Techniques

Cost Cutting in the Hospitality Industry: Strategy or Sabotage? In an industry built on service, comfort, and experience, the idea of cost cutting in hospitality is both tempting and dangerous. With rising operational costs and growing competition, many hotels, restaurants, and resorts look for ways to reduce expenses. But the question remains: When does cost cutting become cost killing? 🔍 Understanding the Motivation Behind Cost Cutting Cost cutting isn’t inherently bad. In fact, during downturns, economic uncertainty, or periods of low occupancy, tightening budgets is often necessary to stay afloat. Typical areas targeted include: - Labor costs - Food and beverage expenses - Utilities and energy usage - Training and development - Guest amenities While these areas offer potential savings, indiscriminate cuts can lead to far more expensive problems in the long run. ⚠️ When Cost Cutting Goes Too Far 1. Decline in Guest Experience Guests notice when quality drops — whether it’s a longer wait time at check-in, smaller portions in the restaurant, or missing in-room amenities. These “little things” make a big difference in online reviews and return bookings. 2. Staff Burnout and Low Morale Reducing staff hours or headcount may save money in the short term, but it often leads to overworked employees, poor service delivery, and high turnover. Hospitality thrives on motivated, service-minded staff — not stressed, exhausted ones. 3. Damage to Brand Reputation One bad guest experience can undo months of marketing efforts. Negative reviews, poor word-of-mouth, and social media criticism are costly consequences of poor service, often caused by cost cutting. 4. Quality Erosion Switching to cheaper suppliers or cutting back on maintenance can result in product or facility failures — leading to guest complaints, safety issues, or expensive emergency repairs. ✅ Strategic Cost Management: The Smarter Approach Instead of sweeping cuts, leading hospitality brands focus on efficiency, not elimination. Here’s how: ✔️ Use Data to Cut Waste, Not Value ✔️ Invest in Cross-Training ✔️ Focus on Long-Term Value ✔️ Digitize Where It Enhances Efficiency 🧠 Cost Cutting vs. Value Engineering The key distinction is this: Cost cutting removes. Value engineering improves. Value engineering looks for ways to redesign processes, enhance quality, and reduce costs without sacrificing the guest experience. 🎯 Conclusion: Choose Wisely In hospitality, every cost decision must be weighed against its impact on: - Guest satisfaction - Employee performance - Brand reputation Cutting costs should never mean cutting corners. The goal is to build an operation that is lean but not mean, efficient but not impersonal, and cost-conscious without compromising quality. Because at the end of the day, hospitality is not a transaction — it’s an experience. #Cost_Management #Hospitality #Hotels #Cost_Cutting #Budget #Financial_Thoughts #Strategy #Decision_Making #Hoteliers

I reduced our Annual AWS bill from ₹15 Lakhs to ₹4 Lakhs — in just 6 months. Back in October 2024, I joined the company with zero prior industry experience in DevOps or Cloud. The previous engineer had 7+ years under their belt. Just two weeks in, I became solely responsible for our entire AWS infrastructure. Fast forward to May 2025, and here’s what changed: ✅ ECS costs down from $617 to $217/month — 🔻64.8% ✅ RDS costs down from $240 to $43/month — 🔻82.1% ✅ EC2 costs down from $182 to $78/month — 🔻57.1% ✅ VPC costs down from $121 to $24/month — 🔻80.2% 💰 Total annual savings: ₹10+ Lakhs If you’re working in a startup (or honestly, any company) that’s using AWS without tight cost controls, there’s a high chance you’re leaving thousands of dollars on the table. I broke everything down in this article — how I ran load tests, migrated databases, re-architected the VPC, cleaned up zombie infrastructure, and built a culture of cost-awareness. 🔗 Read the full article here: https://lnkd.in/g99gnPG6 Feel free to reach out if you want to chat about AWS, DevOps, or cost optimization strategies! #AWS #DevOps #CloudComputing #CostOptimization #Startups

It's always important to consider the specific cost dimensions of a service. In AWS, services that charge you by uptime are typically much more cost-efficient at scale. ALB, for example, is much more cost-efficient than API Gateway at a throughput of 1,000 Transactions Per Second (TPS). Under normal circumstances, say, an average of 1kb of data being processed per request, ALB would cost ~$246.60 per month. Compared to $9072 for API Gateway REST API and $2592 for API Gateway HTTP API. But what if you are dealing with very large payloads? Such as binary or media files? What if the average payload is 1MB? Well, one of the cost dimensions for ALB is "Processed bytes". The more data going in & out, the higher the LCU (load-balancer capacity unit) units you need to pay for per hour. So, at an average of 1MB per request, ALB is much much more costly than API Gateway! This is very much an edge case. But the point is that you always have to consider the specific cost dimensions of a service. The AWS calculator is your friend here, you use it to estimate the cost of your solution and identify potential cost problems before too late. https://calculator.aws So many costly mistakes in AWS can be avoided if we spend a little more time thinking through our solution and its costs. If you wanna learn more cost-saving tips like this and level up your AWS game, then subscribe and get my 5-min tips every Monday: https://lnkd.in/eStnFnfF #aws

Just 20% of procurement teams are recognised for cost avoidance I think that sucks Here's why your business should care: ➟ Stops price creep from silently draining margins ➟ It's harder to grow top line, easier to stop avoidable costs ➟ Cost avoidance is proactive risk management disguised as finance In this post 👇 1. How procurement should be tracking cost avoidance in 2025 and beyond 2. How to align the metric with finance 3. The cost avoidance calculation 4. How to track and report it Let's start with the basics: 1️⃣ Define a Clear, Approved Baseline The baseline is what you would have paid if no action was taken. Possible baselines: ↳ Should-cost models ↳ Budgeted increase assumptions ↳ Supplier proposed price increases ↳ Historical price escalations (CPI-linked contracts) ↳ Market index increases (commodities, logistics rates) Example: Supplier proposed £10 → Negotiated to £9 = £1/unit avoided or Market forecast shows +5%, procurement holds price flat 2️⃣ Align with Finance on Recognition Rules ↳ How and when it gets recognised (if at all) ↳ What qualifies as legitimate cost avoidance ↳ What evidence is required (quotes, emails, market data) ↳ I like to track it separately from hard savings but report both. 3️⃣ Cost Avoidance Calculation Formula Avoided Cost = (Avoided Price Increase × Actual or Forecast Volume) Example: Avoided £1 increase × 50,000 units = £50,000 cost avoidance For demand avoidance (avoiding unnecessary spend): Avoided Spend = (Planned Volume – Actual Volume) × Price 4️⃣ Documentation and Audit Trail Because it’s hypothetical by nature: ↳ Validate with finance for major items ↳ Keep date-stamped records of negotiations ↳ Document supplier proposals or market forecasts ↳ Use external benchmarks when supplier quotes are unavailable Track and report separately from cost savings ↳ Separate hard savings and cost avoidance ↳ Break down by category, supplier, geography, and initiative type via (i) Monthly operational updates (ii) Quarterly procurement leadership reviews (ii) Annual CFO dashboard (ideally blended with total value impact: savings + avoidance + risk reduction) Finally, some pro tips: ➟ Standardise what counts as cost avoidance across procurement, finance, and business units. Make it a commonly agreed and recognised metric. ➟ Use external market indices (commodity prices, CPI, shipping rates) for credibility ➟ Link avoidance initiatives to business KPIs like margin protection, price stability, ESG compliance ➟ Bundle avoidance metrics into total value delivered reports for CPO dashboards _________ If after doing this, your CFO or CEO still doesn't value cost avoidance 🤷 The problem is THEM not YOU I promise! Repost ♻️ if this helped.

Negotiation tactics we used to decrease our SaaS spend by 30% in the last year: It’s amazing to me how much room there is in SaaS pricing. The price is not the price is not the price. You can always negotiate, and there are often loopholes that can save you a ton of money. Here are some of them: - Cancel the renewal before the negotiation. We send cancellation notices to our biggest opportunity negotiations months in advance, and tell them that we will only renew upon having a new deal. Often, account reps can provide special discounts for “at risk” clients. - Get your usage data. We always dig through our data before a negotiation. If our usage is lower than expected, we use that as leverage. For example, our hiring has gone down by about 60% post-ZIRP, but we still paid the same annual price for our applicant tracking system. We showed them the data and made it clear the software wasn’t worth what we were paying. - Be nice. Honestly, sometimes I get frustrated because I know I’m getting the runaround. Every time I do, it backfires. When I’m on my A-game, I’m nice - I tell them I love their software, it is useful, but we just don’t have as much of a need right now. It’s not you, it’s me. I do tell the truth, though, so they know I’m genuine with my praise and critiques. - Compare their costs to other options. There are 3 different types of comparisons: 1) direct competitors. Just call them and get a quote. 2) indirect competitors. Oftentimes another company offers a “basic” version of the software you’re using, so you can use that as leverage: “we don’t need an applicant tracking system because we already pay for Notion”. 3) budget competitors. Compare the pricing of x subscription with y subscription. We regularly compare unrelated products and say: you are the 2nd highest cost product we use, even though you aren’t the 2nd most valuable to us. - Ask 3x. You almost always have to negotiate at least three times to get the best deal. It doesn’t work with every company, but most account reps have latitude and at some point you’re not worth their time. Take advantage and just make sure you press multiple times in a row instead of taking the first offer. I’m surprised at how often we get our way in these negotiations. Sometimes I step in as the founder, but now my team has watched this playbook and gets the same results on their own. You don’t need to be a founder or a business unit leader to do this: act like an owner and make sure your company isn’t wasting money!

The outdated nursing home model: 1. Discharge patients from the hospital to a nursing home with minimal physician oversight. 2. Rely on nurses to manage complex medical conditions without consistent physician input. 3. Watch rehospitalization rates skyrocket, costing billions and worsening patient outcomes. All that hard work for sicker patients and higher costs? Here's the new path: 1. Place full-time physicians in nursing homes for continuous patient oversight. 2. Improve early diagnosis and bedside treatment to prevent unnecessary hospital readmissions. 3. Reduce costs while dramatically improving patient care and quality of life. Here's how to get started: 1. Shift the mindset—nursing homes are medical facilities, not just custodial care. 2. Advocate for full-time physician roles within nursing home settings. 3. Implement structured physician training programs, like the SilverSage model, to drive better patient outcomes. Fewer hospitalizations. Lower costs. Better care. It's hard, but worth it.

🚀 New Resource from the ERAS® Cardiac Society We’re proud to share our 1-page summary sheet outlining the core elements of the Enhanced Recovery After Cardiac Surgery (ERAS® Cardiac) pathway. This care map offers a high-level view of evidence-based interventions across the preoperative, intraoperative, and postoperative phases of care. ✅ Designed for quick reference by clinicians ✅ Based on our latest international consensus guidelines ✅ Supports teams in standardizing perioperative care and improving outcomes Whether you're just beginning your ERAS® journey or refining your existing pathway, this snapshot can serve as a foundational guide. 📄 View and download the PDF below ⬇️ Let us know how your team is implementing ERAS® Cardiac principles! #ERASCardiac #CardiacSurgery #EnhancedRecovery #PerioperativeCare #QualityImprovement #SurgicalExcellence #TeamBasedCare

Our paper that changes standard of care pathways post MI. Since 2016 and the Improve It trial we have known that two drugs statins and ezetimibe combination therapy were better than statin monotherapy after an MI for CVD prevention. We also have had PCSK9i trials showing other combination therapies also reduce CVD when added to statins. Yet this evidence has never been implemented to reflected in guidelines which followed a ridiculous step wise approach to achieve lower ldl targets , delaying those targets being reached even though the goals were based on trials of combination therapy and we know from our own work in Da Vinici and Santorini only 1/5 pts get to ldl-c goals on statin monotherapy. Ethically no committee and no patient would allow or consent to a trial where ezetimibe is withheld or delayed. Today in JACC we publish the next best approach. An emulation study replicating an RCT with clone censor weighting accounting for bias and confounding. They clearly show early use statins at high intensity plus ezetimibe vs delayed addition of ezetimibe vs no ezetimibe provides the greatest CVD benefits including CV deaths . It also means denying our patients two cheap generic drugs has caused harm for a decade. All global guidelines and care pathways should move towards high intensity statins plus ezetimibe as starters of care at discharge after an MI Enjoy each work of the intro and discussion and now go and change your pathways. We have just empowered you to do so! #eas #ictuglobal #imperialcollegelondon

Imagine 2 FP&A analysts. Sarah moves fast. Roughly right, not precisely wrong. 15% variance. 3 models daily. Mike lives in details. 5% variance. 1 model daily. The math: Sarah: 2.55 accurate models (85% x 3) Mike: 0.95 accurate models (95% x 1) Sarah delivers 168% more value. Here's what nobody tells you about FP&A: Perfect forecasts are a myth. 70% become outdated within months. Look at Amazon and Google. Amazon's SageMaker team built for speed. Quick models. Fast insights. Immediate action. Google's way? Test fast, fail fast, learn faster. Rapid insights beat delayed precision. Their secret isn't accuracy. It's velocity. No wonder agile teams drive 25% more growth. FP&A's choice: Perfect numbers or perfect timing? Choose speed: 1. Max 3 scenarios 2. Round to thousands 3. Automate data pulls 4. Build flexible models 5. Focus on top drivers only 6. Present insights, not data 7. Simplify Excel (no model needs 30+ sheets) Your CFO needs direction, not decimals. Markets reward speed, not perfection. Act now.

📦 Understanding Re-Order Point (ROP) and Replenishment in Warehouse Management 📦 In supply chain and warehouse management, knowing when to reorder stock is crucial for maintaining the right balance between inventory availability and cost efficiency. One of the key concepts in inventory management is the Re-Order Point (ROP). But how do you calculate it accurately? And what are the most effective replenishment strategies? 🔹 What is the Re-Order Point (ROP)? ROP is the threshold at which stock must be replenished to prevent shortages before the next delivery arrives. In other words, it is the minimum inventory level at which a new purchase order should be placed. 🔢 Basic ROP Formula: Without Safety Stock: 📌 ROP = Lead Time (Days) × Average Daily Consumption With Safety Stock: 📌 ROP = (Lead Time × Average Daily Consumption) + Safety Stock 🛠 Example Case: A warehouse has a daily material consumption of 10 units, with a procurement lead time of 7 days. 📌 ROP = 7 × 10 = 70 So, when the stock reaches 70 units, the company should immediately reorder to avoid running out of stock while waiting for the next delivery. 🔹 Effective Replenishment Strategies Determining the ROP alone is not enough. Businesses must also adopt the right replenishment strategy to ensure a steady inventory flow without excessive overstocking. Here are three common strategies: 1️⃣ Just-In-Time (JIT) This approach ensures that stock is ordered only when it is needed. It is suitable for businesses with stable demand and reliable suppliers who can deliver quickly. ✅ Pros: Reduces storage costs and minimizes inventory obsolescence. ❌ Challenges: Highly dependent on a smooth supply chain—any disruption can cause stockouts. 2️⃣ Fixed Order Quantity With this method, orders are placed in fixed quantities whenever the stock reaches the ROP. The order quantity is often based on Minimum Order Quantity (MOQ) or Economic Order Quantity (EOQ). ✅ Pros: Helps maintain consistent stock levels. ❌ Challenges: Can lead to overstocking if demand drops unexpectedly. 3️⃣ Periodic Review System Stock levels are reviewed at fixed intervals (e.g., monthly), and orders are placed accordingly. ✅ Pros: Suitable for items with fluctuating demand. ❌ Challenges: If the review period is too long, stockouts may occur before the next replenishment cycle. 🎯 Conclusion Determining the optimal Re-Order Point (ROP) is essential to ensure stock availability without excessive inventory costs. By understanding consumption patterns, lead time, and choosing the right replenishment strategy, warehouse operations can run efficiently and seamlessly, avoiding both stockouts and overstock situations. 🔥 What ROP and replenishment strategy do you use in your warehouse? Let’s discuss in the comments! #Inventory #Warehouse #Supplychain #SCM #Logistic #Rop #Replenishment