WITH the current recession, businesses are looking to save money by decreasing costs.

But where should a company start reducing expenses? Joel Roth, author of The 20 Percent Solution: A Practical Guide to Dramatic Cost Reduction in MROP Procurement, has found methods that cut costs, not staff members.

The critical thing is for companies to alter their way of thinking about business practices.

“It is hard to have cost-cutting methods if a company isn’t willing to change its thinking,” said Roth. “Those companies are in danger during grim economic climates; they won’t innovate.”

MROP (maintenance, repair, operating and production) supplies should only account for 20 per cent of overall costs for a company, according to Roth. However, these supplies consume about 80 per cent of a company’s time, effort and expenses.

Businesses of any size can decrease unnecessary expenses. Roth recommends trying to reduce the overall costs of producing materials. Avoid purchasing unneeded items. Roth sees many businesses spending money on materials that are not essential to the company’s well-being. Old practices continue, even when they should be re-evaluated to adapt to current conditions.

Instead of purchasing all new items, companies should look into used materials. With more businesses closing, used items are probably easier to obtain. Some companies can even recycle elements rather than buying new. Consider standard items instead of specialised ones – standard products are usually less expensive and just as functional.

Businesses should look to employees and suppliers for cost-cutting ideas and input. Roth said that employees and suppliers are both knowledgeable about the company’s methods; they probably have suggestions to save money. By providing proposals, employees can play a part in the process that may prevent layoffs.

“I want companies to throw out their original ways of thinking and look outside the box to change mindsets,” said Roth.

– Creators News Service