In last month's newsletter; David Rounsevell shared cost management tips for 2025. His first recommendation was to leverage expertise.
David's point was about recognizing whether your organization has the internal capabilities to achieve the best results; or if partnering with an expert would deliver more value for you in the long run.
CFOs and Finance Directors highly prioritise cost management. A recent BCG study; "Strategic Insights for Navigating Economic Uncertainty;" released in January 2025; highlighted that cost reduction remains executives' top priority; with a +8pp increase compared to 2024. Click here for the full report.
One of the more common things I hear from CFOs and CEOs is that their costs are under control; and they're all good.
While acknowledging that a lot of time and effort goes into cost management; the question is really "whether your organization has the internal capability to achieve the best results across a wide range of very diverse indirect cost categories—ranging from Insurance and Office Supplies to IT and Travel and Freight just to name a few."
I know many organizations can manage and do manage to achieve excellent results. Still; the real question remains: Are you getting the very best possible results with the limited resources and capabilities at their call?
So; what does using a category or subject matter expert bring to the table for organizations:
- Deep Market and Industry Knowledge of pricing trends; cost drivers; supply chains; industry benchmarks; and best practices beyond generalist expertise. They know the tricks.
- Stronger Supplier Negotiation Specialists help optimise costs; negotiate effectively; and uncover hidden savings; cost-avoidance opportunities; and alternative suppliers.
- Process and Efficiency Improvements knowledge through specialised tools and methodologies to identify inefficiencies and optimise processes for sustainable savings.
- Risk Mitigation and Compliance: Ensure compliance with contracts and pricing while mitigating risks like supplier dependency and cost volatility.
- Innovation and Value Creation While preserving value; they can offer strategic recommendations for long-term financial health beyond short-term savings.
- Knowledge and Upskilling of employees to ensure that organizations develop the ongoing in-house capability required in the future.
I also understand that cost is often a deterrent to using third-party experts. Consider organizations that operate on a contingency basis—"no savings; no fee"—and if unsure; start with one or two categories as a pilot to familiarise yourself with the process and ways of working.
If you are thinking about how using a cost management expert may help; reach out for a chat.
Grant Morrow
Principal Consultant
+61 415 203 575
gmorrow@eragroup.com
