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The problem with cutting costs is that it costs money. What can Government do to make the investment needed to cut costs?
To generate procurement savings, time and energy has to be invested in running a good tender, and extra savings can come from running an e-auction, whilst those savings have to be secured through a proper purchase-to-pay solution. Workforce savings also costs time and money; finding the inefficiencies, redesigning and reorganising services with streamlined efficiency all take time and effort, and then, there are statutory redundancy payments as well as any exit support to help ex employees find jobs.
The problem with cost reduction is that organisations that are not prepared to invest in cost savings will struggle to deliver cost savings in the long run. Departmental managers will often resist staff reductions, claiming that the savings from releasing a staff member will be marginal, thereby undermining the argument for cutting staff. By setting aside a budget for cost-reduction, finance managers can help departments to focus on the potential for cost savings rather than costs. To prepare for oncoming cost cutting, all finance managers should allocate a budget, roughly equivalent to 2-3% of their annual turnover to cost saving measures. |
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 To really make procurement savings you need to know not just where you spend money, but what you spend and whether that spend is essential. If you really want to understand where to make savings, talk to us.
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