Archstone Consulting's Study Finds that 57% of Companies Haven't Yet Identified Sufficient Cost Savings in 2009
Annual Cost Management Study Shows Companies are Drastically Shifting Away from Traditional Tactics to Realize Cost Savings

Archstone Consulting revealed in its annual Cost Management survey that 57% of the companies have not yet identified sufficient savings opportunities to meet the cost reduction targets necessitated by the dramatic economic decline in 2009.   The survey was commissioned to understand the cost reduction targets companies have established, areas of focus to realize these savings and the challenges companies face in implementing their respective strategies.

While the respondents reported a high rate of success in cost reductions last year, companies are drastically shifting cost reduction tactics as they search for incremental savings.. The survey found that in 2009, companies are turning increasingly to the use of more complex initiatives, such as logistics redesign (+11%), shared services (+9%) and asset rationalization (+9%), in order to realize their cost savings goals this year. Furthermore, respondents of the survey expect a decreased use of discreet tactics including restructuring (-11%), overhead cost reduction (-6%), off-shoring (-5%), and strategic sourcing (-4%).

Further Opportunities for 2009
As companies strive to step up their cost reduction efforts and tap into hidden pools of cost in 2009, many companies are seeking to find the next level of cost reduction opportunities. Survey respondents identified the following challenges that prohibited companies from realizing their 2008 goals. These challenges, when addressed, represent unrealized, untouched and unrecognized opportunities for 2009:

• Implementation delays and a lack of resources.
• Upfront investment requirements, regulatory implications, risk to quality or customer service, and potential revenue impact.
• A lack of cross-divisional and cross-functional visibility, divided focus, and the lack of bandwidth and analytical capability, as well as difficulty in tracking “soft” savings.

What Does It All Mean?
As a result of the study, Archstone Consulting concluded that successful companies are rapidly responding to cost and cash pressures with aggressive internal “SWAT” teams. “Companies are quickly mobilizing internal teams to initiate fast, sustainable cost reduction and working capital improvement programs to help maintain or improve profitability for this year and beyond,” said Mr. Wireman. “They are consciously searching for hidden cost reduction opportunities by tackling areas typically considered out-of-bounds in the past and they are trying to capture planned but unrealized savings from past efforts.”

Archstone also identified the top lessons companies can learn from this study about successfully achieving cost reduction targets:

• Increase accountability for successfully completing initiatives and achieving the anticipated results
• Improve program management capabilities
• Target near term efforts 
• Ensure financial planning and control
• Incorporate structural improvements into broader strategy
• Improve talent management and review

Read more about the findings by requesting a summary of the survey results. Please take a moment to complete the form in the link below to receive your complimentary copy.