The overhead cost reductions are often temporary and, as a result, not sustainable. As budget pressures ease, costs often tend to creep back in—often, disproportionately.
The cuts are often made very quickly and sometimes in areas that can be detrimental to the business. If, for example, the workforce gets reduced but underlying processes or workloads do not get addressed simultaneously, selling efforts and client relationships could be damaged and revenues severely affected.
The sales and administrative functions often get overlooked when the costs of ongoing processes (such as manufacturing) are being addressed. As a result, companies can miss as much as 5% in annual efficiency gains within their administrative functions.
- See more at: http://www.alixpartners.com/en/Publications/AllArticles/tabid/635/articleType/ArticleView/articleId/865/Five-Steps-to-Sustainable-Overhead-Cost-Management.aspx#sthash.ySJutvYQ.dpuf
Nov 27th, 2014
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