Most companies have adopted cost management as an ongoing discipline, yet their current approaches may not be sufficient to address the potential downturn challenges ahead. Deloitte Consulting LLP surveyed 70 Fortune 500 companies, and the results revealed:

• Two out of three companies from the study attempt to take cost out of the business through a cost improvement initiative at least once each year.
• A third of companies surveyed set out to achieve significant (double-digit cost reductions) improvements to their cost structure.
• Nearly three in five respondents indicate that lack of stakeholder alignment was a barrier to achieving the desired cost improvement.
• Many companies say they severely underestimated the effort needed to communicate and manage cultural issues. 
• Although 78 percent of the companies in the survey regard cost improvement as a high priority, most continue to emphasize an incremental approach going forward.

What to do? We believe companies need to take full advantage of all the cost levers at their disposal. Adopting a transformational approach that focuses greater attention on strategic, structural improvements can help deliver significant and sustainable cost savings.

Cost improvement is both a science and an art. Although it is critical to identify and pursue tangible cost savings, less tangible factors such as stakeholder buy-in, culture management and timely communication often are just as important to achieving desired outcomes.

To learn more about ways companies can choose an effective cost improvement approach for the future, download the attachment below.

Related Content:
Overview: Upending the Economic Downturn
Conference: Transformational Cost Management

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