Increasing Consumer Pricing Isn’t the Only Option:
When facing margin pressure, companies often pass additional costs to consumers to maintain profit margins. This strategy might work temporarily but can lead to market share loss to competitors offering better pricing and value. Instead, look inward at operational costs like indirect spend for sustainable savings
The Power of Rethinking Indirect Spend:
Indirect spend (covering expenses necessary for operations, such as IT, Facilities & Maintenance, Professional Services, and Logistics) often exceeds 10% of a company’s revenue1. However, only 10-20% of businesses have optimized their spending here. Overlooking this significant cost category can result in missed opportunities for profit improvements of up to 250 basis points2
Clarity Beacon Consulting’s Holistic Approach to Indirect Spend:
Clarity Beacon Consulting helps businesses optimize their indirect spend holistically in four ways:
1 | Buy Cheaper | Utilize bundling and supplier management to negotiate better deals and reduce procurement costs |
2 | Spend Better | Implement standardization and make/buy decisions to use resources more efficiently and effectively |
3 | Spend Less | Identify opportunities for substitution and demand management to eliminate unnecessary expenditure |
4 | Strategize Wiser | Leverage advanced tools, analytics, and process optimization to provide strategic insights for long-term savings and continuous improvement |
Case Study – Manufacturing Company with Limited Software Spend Visibility:
Current Situation: In a challenging economic environment, a manufacturing company found itself under margin pressure and sought ways to cut costs and enhance profitability without raising consumer prices
Solution Implemented: After analyzing the client’s software expenditures, it was determined that ~25% of licenses were unused and allocated to non-desk-based employees, and ~35% of licenses could be downgraded to basic offerings. Ultimately, the number of software licenses were rationalized per user counts while adjusting premium features to match actual needs
Business impact: As a result of these actions, the client achieved a 55% reduction in software licensing costs
Contact Us Today to Help Optimize Your Indirect Spend
To ensure your company isn’t missing out on profitability by overlooking indirect spend, contact Clarity Beacon Consulting. Start your journey toward unlocking untapped value today by visiting www.claritybeaconconsulting.com or emailing us at info@claritybeaconconsulting.com
Sources: 1.APQC; 2.GEP