Getting the best value from the cost base is an enduring issue but has become mission-critical for organisations across sectors as a number of factors come together in combination.
- Inflation remains at elevated levels, with key input costs such as energy and materials rising across the board.
- Interest rates have increased significantly, making debt and financing more expensive.
- The increased cost of living means that many consumers are reining back on discretionary spend and seeking lower cost options, putting pressure on profitability and margin.
- While the same is true of business customers, who are negotiating prices and terms increasingly hard.
It’s a challenging landscape. As a result, many organisations need to reshape their cost base to keep the business on a sustainable footing.
But the danger is that short-term cuts hold the business back from longer-term growth. Organisations need to find ways to take cost out in a considered way that doesn’t inhibit them from the next phase of growth and the ongoing transformation of the business (such as investing in net zero transition).
Key cost levers
Businesses need to look hard right across the cost base to thoroughly evaluate and prioritise action. This may include:
- Revenue & Growth: alignment of resources to growth drivers
- Performance & Cost: what you do and how its delivered
- Financial Engineering: cash, debt and tax
- Portfolio: business portfolio and ownership structure
In addition, it is important to consider how to accelerate efficiency and leverage automation initiatives, to get better value and increased output for less cost.
How KPMG can help
KPMG has extensive experience helping organisations rethink and re-engineer their cost and value proposition to make savings while remaining positioned for growth.
We help businesses rapidly quantify the opportunity, prioritise key steps and then capture the value through both quick wins and the planning and implementation of transformative changes. Our approach is:
- Data-driven – we use advanced data & analytics to give a fact-based view of the status quo and rapidly identify opportunities that will deliver a real return.
- Expert-led – our cost, change and functional expertise means we can identify, design and deliver change across your organisation. Our sector experts understand the key drivers in your industry.
- People-based – we understand the importance of the human element. We help gain engagement, buy-in and understanding, starting from the top and right down through the organisation.
To discuss how KPMG can help your organisation, please get in touch.
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