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Cost reduction for consumer packaged goods

The current economic downturn implies a relapse in demand for services, putting pressure on your company’s revenue growth. Existing cost management programs may not be sufficient to survive and thrive in a downturn. In times of economic downturn, organizations invariably pursue “quick-fix” belt-tightening strategies such as hiring freezes, reduced travel and across-the-board budget cuts. These sorts of initiatives usually deliver only incremental results, and are rarely sufficient to protect companies through the uncertain times that follow.

Also, where margin pressure – resulting from input costs – lead many companies to focus on cost reduction programs, the current economic situation urges companies to upscale these kinds of programs. Because of its mature nature, CPG companies have realized the obvious operational efficiencies. Current situation however will put further and severe cost reductions even more prominently on the executive radar.

Furthermore, a fresh look at your company’s tax position and how the current industry and economic trends affect your business is more than worthwhile.

1. Identify cost reduction opportunities

Most companies have adopted cost management as an ongoing discipline, yet their current approaches may not be sufficient to address the potential downturn challenges. Adopting a transformational approach that focuses greater attention on strategic, structural improvements can help deliver significant and sustainable cost savings.

Deloitte can help in identifying enterprise-wide cost reduction opportunities and managing cost reduction programs. We design and implement sustainable improvements to underlying cost structures, such as streamlining infrastructures, adjusting service delivery models and redesigning business models that help organizations prosper during an economic downturn by helping protect margins, capitalize on opportunities and capture market share.

Probing questions:

  • Have you decided how much cost reduction is needed?
  • Do you know where to locate your possible savings? Have you taken full advantage of all the cost levers at your disposal?
  • And what about your project portfolio?
  • Have you balanced short-term and long-term improvements?
  • How will you actively manage change?

Please contact Koen De Staercke for more information

2. Review your tax position as you adapt your business plans in the light of the current economic climate.
  • In addition to realigning your tax approach with your business plans, every area of tax currently paid should be reviewed for opportunities to:
  • Increase or speed up tax repayments;
  • Reduce or defer tax outgoings

As well as improving the cash position of your business, all strategies should deliver earnings benefits – with VAT and Employment taxes strategies directly increasing pre tax profit. Our dedicated team of tax professionals works closely with you to understand your organisation's global goals and strategies, and how industry and economic trends affect your business. At Deloitte, experts in various disciplines form one team, taking a 360° view of your situation.

Probing questions:

  • Have you assessed how a review of your tax position could result in significant savings?
  • Have you identified key areas for savings around Corporation Tax, VAT and Employment taxes/Social security?

Please contact Koen De Staercke for more information