Profit Building & Cost Reduction-Expense Reduction Solutions

Profit Building & Cost Reduction Estimated Reading Time 1.55 minutes)

If you are interested in profit building and cost reduction I strongly suggest you have a look at these 8 articles each taking about 2 to 4 minutes.

In this video I introduce the reasons why such a model is important and why it is important/

Improving profits is one of the main objectives of any business, and yet based on my 20 years of experience as a senior finance professional helping, supporting and working with those responsible for profit and loss accountability I have observed that most managers do not truly understand how to move beyond the basics of cost-reduction and profit improvement.

Could there be a more effective way to focus our daily business activities? If profit improvement is one of the essential elements of our business strategies and challenges why don’t we develop the ability to focus continuously on profit improvement the same way we focus on marketing, operations and Human Resources? Why don’t cost reduction and the resources and leadership necessary for its success receive management's constant attention?

My method (Profit Maps) demonstrates how large corporations, a small business or a single department can improve its profits and reduce costs using the proven approach that is based on team innovation and management.

Typically the company's knee-jerk response to the need to reduce cost is to reduce the workforce. People are laid off in large numbers and dollars are saved-or so it seems. In most situations this is a mistake or merely a short-term solution. The best approach is to give employees a chance to participate in developing cost reduction strategies so that profit improvement is perpetual. In this scenario people are not laid off in large numbers, but instead, better utilized within the organization where they will generate a multitude of creative ideas and effective solutions for profit improvement.

What is the Rationale for a New Model?

As a senior manager and finance professional I have never found a method that deals simply and directly with the concept of profit improvement and cost reduction.

There are many books written which do not have a direct impact on how to increase profits. Each time I searched for such a book I was forced to settle for publications on business theories, financial management, operations management or costing. I never found a book that specifically told me how to take a business, organization, department or team through an easy to use process to achieve cost-reduction or profit improvement.

My method does not require the executives and managers to read volumes of business theory and it offers an effective short cut to profit building. It moves beyond abstract theory to actual demonstrations of how to quickly get to the point of reducing costs and boosting profits.

Who Should Know and Use the Method?

Because profit improvement and cost reduction should be every manager’s responsibility I believe this method should to be an effective vehicle for profit improvement and cost reduction within their areas of responsibilities. Anyone concerned with improving profits will find it useful. If every manager and supervisor follows the technique as discussed here, eventually the whole company will be contributing to the process of profit building.

About The Author (Skanda Kumarasingam is a Chartered and Management Accountant. He earned his MBA and MSc from the University of Lincoln UK. He has many professional qualifications in Quality Management, Supply Chain Management and Taxation) I’m a senior business professional having held general management roles with profit centre responsibility or supporting executives with such responsibilities for over 15 years. I’ve worked in KPMG, Coke, PepsiCo, Marks and Spenser (UK), Gap (Singapore), Next-Near East (Singapore) and Ernst and Young (Bahrain). During this time I’ve been frustrated without simple and effective tools, management can use to improve profits or reduce costs. I have seen very complex, theory based, costly and time consuming performance improvement tools marketed by consultants without any impact on the bottom-line. Yes, sometimes they do calculate vague or arbitrary cost/benefit analysis to prove a point. The only issue is costs are fixed but the benefits never happen in the future! This led me to develop many tools and techniques, which generate ideas and action step to manage and control costs and improve profits that are simple, holistic, and not costly or time consuming; tools that staff enjoys working with on their own every day. Some models like the Profit Maps (for profit improvement and cost reduction) and the LEAST Tax Model (for proactive tax planning) has been widely used in organizations saving them large amounts of dollars and improving profits.