Organizations searching for 'creative' cost reduction.

• Author: Heffes, Ellen M.
• Position: COST CUTTING - Survey

An overall finding of a recent Archstone Consulting survey is that 57 percent of those surveyed have not identified sufficient savings opportunities to get the cost-reduction targets necessitated by the dramatic economic decline in 2009. The survey was commissioned by the management strategy and operations consultancy to understand the cost-reduction targets companies have established, areas of focus to realize these savings and the challenges they face in implementing their respective strategies.

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

Archstone President and CEO Todd Lavieri, says the firm's prior cost-management report concluded that 86 percent of companies surveyed said cost-reduction initiatives were an integral part of how they operate. However, "as companies face this new economic environment, they are relying less on traditional cost-reduction measures and are searching for more...