6 Effective Next-wave Strategies to Reduce Operational Costs

During the height of the recession and since, multichannel merchants have succeeded to varying degrees at reducing and better containing operational expenses.

Unfortunately, as economic recovery continues to sputter, improvement in consumer and b-to-b spending is likely to be slow-going, at best. Indeed, we may never see a return to pre-recession levels. Significantly sharpened marketing initiatives, while crucial, can go only so far in relieving margins increasingly pressured by rising business costs.

Now what?

FUNDAMENTAL CHANGE REQUIRED

By now, most companies have been through every major department in their quest to realize savings. But many have mostly picked the low-hanging fruit.

Once the quick, obvious changes have been made, further progress on the cost front requires a willingness to tackle the fundamentals. It's time to engage in a no-holds-barred, zero-based, holistic re-examination of operations and business practices.

While this next wave is difficult (even painful), I can assure you that redoubled, unflinching reassessments are enabling even quite tightly-run companies to find additional, substantial savings, get significantly leaner, and even improve customer service in the process.

Deriving maximum results from next-wave cost-reduction initiatives requires re-evaluating the full gamut of operations and devising creative new systems and process solutions within each area. A partial list includes inventory, supply chain, receiving, product/stock location, picking and packing, and maintenance systems.

Where to begin? Here's a “hit list” of the areas and strategies that generally yield the greatest leverage, and likely deserve the first focus.

1. Take charge of freight costs

2. Take a hatchet to slow-moving inventory

3. Improve your vendor compliance program

4. Streamline the customer contact center

5. Implement daily “stand-up” meetings

6. Grow your supervisors and managers

Curt Barry is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consulting firm.