Joint Cost Reduction Strategies

𝗟𝗲𝘁'𝘀 𝘁𝗮𝗹𝗸 𝗰𝗼𝘀𝘁𝘀 𝘁𝗼𝗱𝗮𝘆... ...because if you're in FP&A, you've definitely sat in one of those meetings… “Guys… we need to cut costs.” Everyone goes silent and all heads swivel to finance. lol. And then you instinctively open Excel to look busy 😩 A while back, a company I worked with decided to launch a "cost reduction sprint." The goal? Shave ₦100M off the P&L in 60 days. The first move? Freeze team lunches, and slash staff welfare. But guess what was untouched? >> A ₦40M/month logistics arrangement that hadn’t been renegotiated in 18 months. >> A bloated software stack with 10+ overlapping tools. Yes, costs came down. But so did morale, productivity, and eventually, revenue. Don't be like that. Let me show you how to approach cost reviews smartly: 1. Start with the big buckets: Don't waste energy arguing over lunch budgets. Zoom out. Where are the real levers? Usually, 3–5 cost lines move the needle: logistics, payroll, marketing, operations. Focus there first. It’s where meaningful efficiency lives. 2. Break down into fixed vs. variable costs and review performance: >> Fixed costs (rent, salaries) require structural decisions: renegotiation, process reengineering, automation, etc. >> Variable costs (shipping, commissions, raw materials) give more flexibility for short-term gains. Plot costs vs. revenue: do they scale appropriately? 3. Do a zero-based review (where needed): Zero-based budgeting isn’t just for budgets. Ask: “If we had to build this cost line from scratch, would we spend this much? Why?”. It's tough work but worthwhile, and especially useful for subscriptions & software, marketing expenses, consulting and third party vendors. 4. Evaluate vendor spend: Vendor lines hide shocking amounts of inefficiency. I once found a team paying 3x market rate for routine services because “we’ve always used them.” Ruthlessly benchmark rates. Consolidate where possible. Kill redundancy. 5. Headcount & Payroll: Headcount is usually the biggest cost but it’s not the first to attack. Before suggesting layoffs: >>Fix team structure >> Eliminate manual tasks >> Automate where possible >> Cross-train before hiring Layoffs are sometimes necessary, but they should never be the default. 6. Introduce procurement & expense discipline: This doesn’t mean burying everyone in red tape. Just ensure spending decisions are intentional. Clear approval flows. Visibility. Pre-approvals for big ticket items. 7. Simulate cost impact scenarios: “What happens if we cut travel by 40%?” “What if we renegotiate rent in 3 locations?” Data wins debates. Always model before recommending. 8. Tie every cost to a business goal. For every cost line, ask: “What outcome are we driving with this?” No clear answer? That’s a red flag. Recommend a reduction or a reallocation. Bottom line: Cutting costs is reactive. Optimizing costs is strategic. The real win in FP&A is helping the business do more with less, without ruining the system. #FPATuesday

How I Reduced Procurement Costs Without Compromising Quality – A Battle-Tested Strategy As a procurement manager, I’ve heard it countless times from leadership: “We need to cut costs—but don’t compromise quality.” Sounds simple, right? But in reality, it’s a balancing act that requires strategy, negotiation, and innovation. One year, my company faced increasing raw material costs, supplier price hikes, and budget constraints. The challenge? Reduce procurement expenses without affecting production quality. Here’s the exact plan I implemented—and how you can do the same. 🔍 Step 1: Supplier Consolidation – Less is More Instead of working with multiple small suppliers, I identified key vendors who could offer a broader range of products. By consolidating purchases, we unlocked volume discounts and secured better pricing. 💰 Step 2: Mastering Price Negotiation I reviewed existing contracts, highlighting our loyalty and high-volume purchases to push for better rates. Regular price benchmarking ensured we weren’t overpaying. 📊 Step 3: Evaluating Supplier Performance Numbers don’t lie. I analyzed on-time deliveries, defect rates, and responsiveness, leveraging this data to negotiate improved terms—or switch to cost-effective suppliers. 📦 Step 4: Optimizing Inventory – JIT for the Win By implementing Just-in-Time (JIT) inventory management, we reduced storage costs and avoided tying up cash in excess stock. No more wasted resources. ⚙️ Step 5: Process Automation & Tech Integration Procurement inefficiencies were bleeding time and money. We automated purchase orders, implemented e-procurement tools, and improved visibility into spending patterns. This saved countless hours and reduced errors. 🛠 Step 6: Exploring Alternative Suppliers While staying loyal to key partners, I always had a backup plan. Scouting new suppliers created competition—driving prices down without compromising quality. 🔬 Step 7: Cost Analysis & Contract Optimization A detailed cost breakdown of each procurement category revealed hidden savings opportunities. Renegotiating underperforming contracts and restructuring terms improved our bottom line. 📚 Step 8: Training & Continuous Improvement A procurement team is only as strong as its skill set. I ensured my team was trained in negotiation tactics, cost-saving strategies, and industry best practices. 🚀 The Result? 📉 15% reduction in procurement costs 📦 Improved supplier reliability 💰 Zero compromise on material quality 💡 Lesson: Cutting costs isn’t about squeezing suppliers—it’s about strategic procurement, smarter negotiations, and continuous improvement. 👉 What’s your biggest challenge in reducing procurement costs? Let’s discuss in the comments! 👇 #Procurement #CostSavings #Negotiation #SupplyChain #Efficiency

Your suppliers just raised prices again - what’s your next move? 83% of procurement leaders say inflation and commodity price spikes are their #1 challenge. (KPMG) Many teams are expected to deliver 10% more workload with the same or fewer resources. (The Hackett Group) Costs are rising, budgets are tight, and procurement is under pressure to cut costs while keeping supply chains running. So, how do you take back control? Here’s how procurement can fight back: 1️⃣ Lock in Prices Early Negotiate long-term contracts and index-linked pricing to stabilize costs. 2️⃣ Improve Spend Forecasting Track commodity trends and inflation data to buy ahead of price hikes. 3️⃣ Renegotiate Supplier Agreements Nothing is set in stone - push for volume discounts, better payment terms, and cost-sharing deals. 4️⃣ Optimise Demand Planning Avoid last-minute, high-cost buys. Plan ahead, consolidate spend, and improve visibility. 5️⃣ Diversify & Nearshore Suppliers Reduce risk by sourcing alternatives or shifting production closer to home. 6️⃣ Focus on Total Cost of Ownership (TCO) Cheaper isn’t always better - factor in logistics, durability, and maintenance. 7️⃣ Leverage Technology & Automation Use procurement analytics to identify hidden savings and improve efficiency. 8️⃣ Strengthen Supplier Collaboration Work with suppliers on cost-saving innovations and efficiency improvements. 9️⃣ Hedge Against Currency & Commodity Risks Protect against price fluctuations with hedging strategies and fixed exchange rates. 🔟 Think Value, Not Just Cost Cost-cutting alone isn’t a strategy - focus on sustainable, long-term savings. Inflation is tough, but procurement teams that move strategically can stay ahead. So - what’s your next move? Let’s discuss below! ♻️ Repost to share with someone who could benefit from these tips. 🔔 Follow Miroslav Pitlanic for more actionable procurement insights. #procurement #costmanagement #inflation #supplychain #strategicsourcing #SPLPartners

If I worked in Private Equity, I'd be thinking a lot more about tech. Because tech-driven cost reduction is the new PE playbook. Cost-cutting is no longer about layoffs. It’s about getting the tech right... 1. Use Technology to Cut Costs Tech tools are now key for saving money. Firms use: • ERP systems to manage resources better • CRM systems to improve customer relations • Real-time dashboards to track performance These tools help firms see where they can save. 2. Identify Waste and Redundancy Tech helps find areas that waste money. Firms can spot: • Unused resources • Overlapping roles • Inefficient processes This leads to smarter spending. 3. Invest in Smart Tech Smart tech can save 3-5% in costs. It also speeds up processes. Firms should focus on: • Automation to reduce manual work • Data analytics to make better choices • Cloud solutions for flexibility and cost savings 4. Make Faster Decisions With tech, management can act quickly. Real-time data leads to: • Better insights • Faster responses to market changes • More informed choices 5. Boost Operational Speed Tech improves how firms operate. Firms can: • Streamline workflows • Reduce delays in processes • Enhance team collaboration This means getting more done in less time. 6. Ensure Every Pound/Euro/Dollar Adds Value Every expense must count. Tech helps firms track spending. Firms should: • Analyse costs regularly • Adjust budgets based on performance • Focus on high-impact areas 7. Adapt to Market Changes The market is always shifting. Tech allows firms to adapt quickly. They can: • Monitor trends • Adjust strategies in real-time • Stay ahead of competitors 8. Keep Improving Cost reduction is an ongoing effort. Firms must: • Regularly review tech tools • Train teams on new systems • Innovate to stay efficient TL;DR: Private Equity is changing fast. It has to. In 2025 and beyond, tech-driven cost reduction is a big part of how to win. Agree / Disagree? What did I miss?