Many organisations have thoroughly tested and traditional methods of measuring costs, which they report on and review very regularly, usually monthly. Constant monitoring may show that costs are ‘too high’ – judged so either because they are increasing generally or have begun to represent too high a ratio against income or value. The response to this situation can simply be continuing to monitor upward-spiralling costs until very drastic measures are required or to take the simple route of cutting the most expensive items (often staff or services). This may work in the short term but create far worse problems long-term.
At As Esse we work with clients to gather data that tells us why costs are too high, and then work on solving the root-cause problems. This involves:
- Examining existing data to see what it tells us (including the value of existing data)
- Looking at different areas of cost and what drives them
- Identifying the legitimacy of costs – do they create value or are they waste?
- Simplifying ways of working and removing unnecessary costs.
In many organisations with whom we work, the levels of failure and waste are not only not measured, but are not even recognised. By focussing on key high cost areas we can work with you to remove waste and the costs associated with doing the wrong things or doing the right things badly.