Savings: The three biggest levers

One topic is currently at the top of many companies' agendas: saving. Due to the uncertain economic situation and falling revenues, they have to pay more attention to their costs. They need to avoid waste, make their workflows and processes more efficient and question their own performance. But where to start? There are three effective levers to reduce (fixed) costs.

Cost killer 1: Avoid waste

In every company, money and materials are wasted. Among other things, waste and rejects are produced. Or in general: too many resources are consumed. In times when companies are doing well economically, this waste is usually given little attention. Because: Who likes to deal with such "small stuff" when the signs are pointing to growth and the order books are full to the brim?

In bad times, things are different. Then the cost screw is often the only thing a company can turn to improve its liquidity, at least in the short and medium term. And if one deals seriously or systematically with the topic, it usually becomes clear:

• Many small - seemingly insignificant - savings quickly become large sums. And:
• It is not uncommon for a cost reduction of a few percent to determine whether a company operates at a profit - for example, if the profit margin is only four or five percent.

The problem here is that waste at the value-added level is usually not noticed from a bird's eye view or top-down view. In order to explore the savings potential here, employees who are familiar with the processes and tasks must be brought on board.

That's why companies that want to successfully reduce their waste often launch idea competitions. They encourage their employees to look for ways to save money. The results of this are impressive: Through such campaigns, companies save 1000 to 3000 euros per employee/year. This is shown by an evaluation that Innolytics conducted on the basis of more than 100 idea competitions in Germany across all industries.

Cost killer 2: Eliminate time wasters

Companies are like people: In fat years, they put on fat. For example, they start or keep running projects that do not make a positive contribution to the company's success. They practice quality management as if it were about developing products and solutions for eternity. They indulge in a decision-making culture which, although it gives many people the feeling that "I, too, am being heard", slows down processes to an extreme. They provide their customers with (free) services that they do not value at all. This eats up working time and ties up staff. And since wages and salaries are the largest cost block in most companies, there is usually great potential for savings in identifying and eliminating such time wasters.

But here, too, there is a challenge: employees have often become accustomed to the existing procedures and processes. Therefore, if you want to develop more efficient solutions, it is first necessary to steer the employees' thinking in new directions - for example within the framework of the idea competitions. In addition, they should be involved in the savings. This increases their motivation to think specifically about how they can work (together) more effectively and their willingness to crack even "hard nuts". Modern idea management software offers the possibility for employees to discuss the time wasters in the team and to quantify the waste in euros.

Cost killer 3: Digitize processes and workflows

For many companies and their employees, digitization is an abstract term. What it means often only becomes clear to them when there are measurable goals behind it - for example: reducing the lead time for orders by 20 percent. Or: halving the response time to offers. Digital transformation helps companies to (partially) automate or digitalize time-consuming and thus cost-intensive processes with often manageable means. Here are a few examples.

• Example 1: Reducing costs in customer service. Digital solutions enable companies to answer standard questions largely online - for example through FAQs and explanatory videos on the website or database queries, e.g. on the status of an order.
• Example 2: Reducing costs in logistics. Digital solutions such as virtual reality glasses can help employees find loads faster and organize the warehouse more efficiently. For example, the digitization of delivery notes drastically reduces the effort required for organization and queries.
• Example 3: Reduce costs by automating decisions. In many companies, decisions - for example, about compensation for customer complaints - could be made individually on the basis of standardized and automated criteria instead of by the individual clerks. For example, if a customer is dissatisfied with a product, gives reasons for this, and can also prove this with photos, compensation is automatically granted. The automation of decision-making processes helps companies to carry out lengthy routine processes quickly and efficiently.

Employee participation as a success factor

When looking for potential savings at the operational level, managers rely on input from their employees because:

• It often requires a detailed knowledge of processes to identify and reduce waste and time wasters. And:
• When it comes to making their processes and services more effective, companies increasingly have to think across divisions due to the higher level of networking, because: The know-how required for the savings is located in different heads in the company and must first be brought together and joined in order to achieve the possible savings.

That's why modern idea management software includes the option of networking employees at the different points in the company; furthermore, they can discuss with each other online. This enables employees to design complex solutions, even in cross-departmental and cross-location teams, where truly new ground is broken. It is also important to illustrate the savings potential in simple business plans. That's why Innolytics, for example, has developed a value calculator for ideas that employees can fill out quickly and easily. The possible savings potential of their ideas also becomes immediately clear. This is important for acceptance in the company. It is also clear what bonus employees can expect if their solution brings the hoped-for savings. This is important for their motivation to also think about problems whose solution requires some "brainpower" and the abandonment of familiar routines, but which have a high savings potential.