What are cost saving opportunities?
Economies, political scenarios, social challenges, and global factors impact the growth, issues, and cost saving opportunities in every market and significantly alter companies’ costs. Costs have risen exponentially in recent years, and companies often struggle to improve savings and quality of offerings without identifying effective cost saving opportunities and implementing procurement market intelligence. All businesses incur various costs when operating, regardless of industry, target consumers, business modules, or market developments. Therefore, experts have developed a renewed approach to managing and reducing companies’ costs by implementing data-driven policies and actions and addressing problem points within the company. In the BFSI sector, prices have risen significantly due to changing economic factors, the rising use of technology, and the increasing demand for services of varying kinds. Banking, financial services, and insurance are a crucial tenet of every citizen’s life, and the costs of providing services to a vast population can have recurring damages. Most often, companies fail to identify and capitalize on cost-saving opportunities or leverage procurement market intelligence within their organization and systems and incur higher costs than required or advised. Understanding and adopting the ideal approach to cost-saving is imperative to the successful, cost-effective, and sustainable growth of any business.
Common types of cost saving opportunities
Minimize Wastage: In the BFSI sector, wastage can include time, labor, effort, and processes in the procurement and sourcing sectors. Eliminating wasteful activities or processes that produce minimal or no results and cause redundancy in certain aspects is imperative to growth and overcoming the causes for low efficiency, productivity, and savings. Repetitive, manual, and redundant data entry, activities that provide minimal value, over-servicing minor challenges, and systems that made it challenging to identify problem areas are some of the processes that led to unnecessary costs, efforts, and potential errors. Identifying these issues and implementing alternative solutions, such as automation of basic data entry, improved feedback and suggestion platforms, prioritization of valuable services, and mitigation of low-value activities, is essential to create cost saving opportunities.
Centralize Processing: A common challenge plaguing banks and other BFSI service providers is the lack of centralized structures and processing. Maintaining a significant distinction between procurement teams and sales or marketing offices is imperative to create clear and efficient centralization and minimize multiple challenges caused otherwise. Higher workloads in unplanned spaces can lead to unnecessary staffing, overloads, inefficiencies, and significant effort by corporate offices to reduce the inaccuracies created by branch operations. Additionally, decentralization leads to miscommunication, unnecessary expenses, and lower customer satisfaction. If a BFSI sector company cannot prioritize or categorize work, customer trust and loyalty can significantly waiver and cause further business losses. Bringing all major operations together and categorizing business units and their efforts appropriately is imperative for better cost saving opportunities.
Maintain Consistency: Mergers and acquisitions, partnerships, and business deals are common in the BFSI sector, and companies often find themselves owning, managing, and bearing the costs of various business models and units. A significant cost-saving opportunity that businesses fail to acknowledge is uniformity and consistency. Maintaining consistent procurement operations across all acquired, partnered, and owned business units can mitigate unnecessary costs, minimize the possibility of unexpected challenges, and provide cost saving opportunities. In a sector that offers a wide variety of services, establishing consistency between branches and supply chain activities can help identify problem areas and implement cost-saving strategies in the best possible way. Additionally, this enables the trial and company-wide application of new solutions, rather than assessing and developing unique processes for each office.
Evaluate Performance: Routinely assessing and auditing the procurement processes, systems, and costs being implemented or incurred in various business units can help address issues before they become significant challenges or cause substantial losses. Tracking the business’s performance, reviewing declines or changes, and implementing strategies to mitigate the problem can reduce losses and minimize the costs potentially incurred at a later point. Additionally, this helps promote improved productivity and maintains an equal standard across all business units. Monitoring teams’ and individuals’ performance can also help identify unnecessary losses, processes, or activities that can be mitigated and serve as a cost-saving opportunity.
Plan Staffing: Attracting, engaging, and retaining outstanding talent can transform a business, and in the BFSI sector, skill and expertise serve as substantial differentiators. Companies in this industry often overstaff and fail to track or assess the performance of everyone representing the company. To maintain efficiency, companies must learn to preserve lean and effective operations and mitigate a large sum of unnecessary costs. Developing a precise staffing plan that clarifies volume, expertise, responsibilities, and expectations can help managers maintain high performance and reduce overstaffing challenges. Failure to plan to staff can also cause overcrowding, a high probability of errors, poor communication, and inefficiency.
Understanding the importance of cost saving opportunities is critical for a meteoric rise for your business. We are top procurement market intelligence in action for all your sourcing needs.
Success Story – Gain the Edge, with SpendEdge
SpendEdge closely analyzed the impact of inefficient practices, errors, and challenges in the BFSI sector and identified multiple cost-saving opportunities within the industry. A renowned bank sought to reduce its expenses due to the rising external costs but witnessed a significant incline in their costs after a recent acquisition. Although they intended for added resources and workforce to mitigate certain challenges, it caused further issues and higher costs. Our experts worked closely with the bank to identify high-cost but low-value activities and streamline essential processes in the back office. The client implemented significant operational changes with the advice provided by SpendEdge experts and witnessed a steady decline in procurement costs and a substantial rise in viable cost-saving opportunities. Additionally, the client leveraged our procurement market intelligence insights and successfully reduced costs, increased efficiency, improved internal operations, and overcame significant procurement challenges.