Financial Skills: Overhead cost reduction

Audience

Anyone with significant budgetary responsibilities will benefit from attending this event, particularly:

• Managing directors
• Finance directors
• Strategic business unit managers
• Management accountants

Skills Gained

This programme will help you:

• Avoid the dangers of simplistic cost cutting
• Rebalance resources without having to turn the organisation upside-down in the process
• Initiate a successful overhead review
• Implement the necessary changes quickly and efficiently
• Make effective overhead cost management part of normal business

Course Outline

Problems of reducing overhead costs

• Trends in overhead activities and costs
• Impact of technology and structural change
• Volume changes
• Difficulty of assessing value for money
• Danger of simplistic cost cutting
• Failure of budgeting systems in managing overhead costs

Choosing the right approach to an overhead review

• Radical cost reduction
• Continuous improvement
• A middle way - rebalancing of resources
• Timescales and staff involvement

Avoiding cuts to strategically important capabilities

• Understanding the business imperatives
• Identifying where greatest value will be added
• Creating cost reduction plans that support

The strategic imperatives

Organisation structure

• Designing an organisational structure that utilises managers effectively
• Speeding up communication and decision-making

Overhead activity analysis

• Activity data
• Types of overhead activity
• Using activity analysis to identify and cut out waste

Value for money analysis

• Costing outputs
• Assessing value to service recipients - both internal and external
• Defining and assessing options

Process improvement

• Mapping processes
• Identifying process waste
• Practical steps to getting sustainable process improvement

Rebalancing resources

• Reducing costs - method changes, process changes, service level reductions
• Improving service - service level improvements, new tasks and services
• Decision-making on rebalancing of resources

Roles with repetitive tasks

Techniques to assess resources needed to handle forecast volumes

Avoiding unprofitable products/services and customers

• Identifying the unprofitable products/services and customers in the first place
• Working out what to do with them

Purchasing effectively

Ten ways to negotiate keenly

Systems review

• The importance of IT and systems in overhead processes
• Reassessing the IT/IS development backlog and plans
• Future impact of technology

Forecasting

• The high costs of forecasting errors
• Best practice in approaches to forecasting

Benchmarking

• Ways in which benchmarking can benefit
• Techniques for benchmarking and the pros and cons of each

Reducing assets

• Identifying under-utilised fixed assets
• Reducing working capital

Effective implementation

• The value of involving people in identifying change opportunities
• Understanding the psychology of change
• Strategies for taking people with you
• Capturing cost reduction ideas
• Two key models for managing change
• Identifying good performance measures for tracking implementation
• Managing successful implementation
• Ensuring commitment and ownership to sustain momentum
• Making effective overhead cost management part of normal business

Financial Skills: Overhead cost reduction / F-OCR