Tags |
|
|
Links |
|
|
E-Folder - Why 9 in 10 Businesses are Overspending on Day-to-day Expenses
Experts estimate that 90 percent of Australian businesses are overspending on day-to-day expenses, by as much as 75 percent in some cost categories!
Looked at the operating costs of your business lately? You might be surprised at the savings that can be gained with a systematic approach to cutting costs.
The easiest way to lift profits is to cut the fat out of costs. Cost-cutting and profit increases can amount to much the same thing if
Looked at the operating costs of your business lately? You might be surprised at the savings that can be gained with a systematic approach to cutting costs.
The easiest way to lift profits is to cut the fat out of costs. Cost-cutting and profit increases can amount to much the same thing if
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
handled correctly. Cost-cutting does not necessarily mean slashing and burning budgets on a 'let's-see-if-this-works' whim, nor does it mean the intense scrutiny of entertainment expenses in August, before reverting to three-hour lunches in December.
But what if a company could save 20 percent a year on its stationery spend? Or 26 percent a year on its courier costs? Or 76 percent annually on its printing bills? Wouldn't that represen
But what if a company could save 20 percent a year on its stationery spend? Or 26 percent a year on its courier costs? Or 76 percent annually on its printing bills? Wouldn't that represen
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
t real savings - and an increase on the bottom line?
The truth is that a significant cause of poor business performance in Australian companies is the lack of attention given to the cost of running the business.
The reasons for this lack of attention are many, but here I am going to focus on three of them:
· the process of cost management and review can be difficult to manage
· tough-minded resolve is usually required
· cost-reducti
The reasons for this lack of attention are many, but here I am going to focus on three of them:
· the process of cost management and review can be difficult to manage
· tough-minded resolve is usually required
· cost-reducti
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
n initiatives are not always positively received by colleagues and staff.
Any executive who chooses to undertake a program of cost-management, then, is probably going to find themselves out on a limb and needing to show true leadership skills. And he or she is going to have to do it in today's business world, when the buyer is often at a disadvantage.
The seller, or supplier, possesses vital market knowledge that the buyer, or company,
Any executive who chooses to undertake a program of cost-management, then, is probably going to find themselves out on a limb and needing to show true leadership skills. And he or she is going to have to do it in today's business world, when the buyer is often at a disadvantage.
The seller, or supplier, possesses vital market knowledge that the buyer, or company,
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
does not have because of a lack of resources, time, expertise - or a combination of all three. Consequently most, if not all, organisations overspend significantly on their business operating costs.
Experts estimate that 90 percent of Australian businesses are overspending on day-to-day expenses, by as much as 75 percent!
How does a company know if it's one of the 90 percent? If a company can answer 'yes' to any of the following there i
Experts estimate that 90 percent of Australian businesses are overspending on day-to-day expenses, by as much as 75 percent!
How does a company know if it's one of the 90 percent? If a company can answer 'yes' to any of the following there i
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
s a good chance it can reduce its business operating costs and free up profits:
YES/NO There is no centralised purchasing system. Each department seems to have its favourite suppliers and its own purchasing processes. YES/NO We always seem to be purchasing in an ad hoc, as-needs manner, instead of benefiting from bulk purchases. YES/NO We seem to stick to the same supplier and trust that they're giving us value for money.
Major areas
YES/NO There is no centralised purchasing system. Each department seems to have its favourite suppliers and its own purchasing processes. YES/NO We always seem to be purchasing in an ad hoc, as-needs manner, instead of benefiting from bulk purchases. YES/NO We seem to stick to the same supplier and trust that they're giving us value for money.
Major areas
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
f cost control
The main areas where costs can be rationalised include telecommunications, energy, freight, couriers, mail, office supplies, waste management, reprographics and stationery. There are other areas such as cleaning, merchant card services, maintenance contracts and document storage, but of course the list is endless.
Apart from reviewing overhead costs and establishing benchmarks, there are a number of other factors that nee
The main areas where costs can be rationalised include telecommunications, energy, freight, couriers, mail, office supplies, waste management, reprographics and stationery. There are other areas such as cleaning, merchant card services, maintenance contracts and document storage, but of course the list is endless.
Apart from reviewing overhead costs and establishing benchmarks, there are a number of other factors that nee
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
d to be taken into consideration to achieve long-term success in maintaining cost savings. These include improved inventory management, cost-analysis and management tools, better compliance with corporate contracts and ensuring that staff remain focussed on strategic tasks.
So how does a company implement a plan of effective cost-management? I would suggest the following:
1. Care about effective cost-management
If staff are complacent
So how does a company implement a plan of effective cost-management? I would suggest the following:
1. Care about effective cost-management
If staff are complacent
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
about financial performance and cost control, there is little chance that a cost-saving project will succeed. Executives must find the time to take an interest in reviewing expenses and reducing costs, and staff generally mould their behaviour to match that of their leadership.
2. Cost-cutting should not be allowed to become 'flavour of the month' Remain motivated to keep costs in check on a regular basis. If a cost-management 'culture'
2. Cost-cutting should not be allowed to become 'flavour of the month' Remain motivated to keep costs in check on a regular basis. If a cost-management 'culture'
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
is not established, employees will quickly allow your 'push' to fade away. It's important to instigate measurable strategies for cost reduction.
3. Over-confidence can be a killer
Companies which assume that their costs are under control based on historical trends, or that their market knowledge is watertight, run the risk of overspending through arrogance. You know what you're paying, but do you know what your competitors pay for the s
3. Over-confidence can be a killer
Companies which assume that their costs are under control based on historical trends, or that their market knowledge is watertight, run the risk of overspending through arrogance. You know what you're paying, but do you know what your competitors pay for the s
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
ame products? Never assume that you know the market as well as your suppliers - and never assume that they're doing you the best deal possible.
Compare your cost-management performance to others in your industry and region. Gather the data from outside agencies, consultants or benchmarking services, and be careful that you understand the data as it applies to your situation. Data is useless unless it is interpreted correctly.
4. Underst
4. Underst
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
and what you're buying
Determine your product and service requirements. Don't purchase premium services unless absolutely necessary. Sales people will often use bait-and-switch tactics to move you on to their higher margin items. You end up buying unnecessary extras or add-on services such as maintenance agreements. Also watch for relationship-building tactics. Do you really want to pay higher prices for the occasional lunch or rugby gam
Determine your product and service requirements. Don't purchase premium services unless absolutely necessary. Sales people will often use bait-and-switch tactics to move you on to their higher margin items. You end up buying unnecessary extras or add-on services such as maintenance agreements. Also watch for relationship-building tactics. Do you really want to pay higher prices for the occasional lunch or rugby gam
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
?
5. Talk to your suppliers
Companies that buy the same product and the same quantities year in, year out, are probably paying way too much. Suppliers will price their offerings according to what the market will bear. Having done your research, inform suppliers that you are reviewing your costs, which have to be reduced. Then prepare to negotiate, and to comparison shop.
6. Stay alert
Monitoring your cost-management strategies is vita
5. Talk to your suppliers
Companies that buy the same product and the same quantities year in, year out, are probably paying way too much. Suppliers will price their offerings according to what the market will bear. Having done your research, inform suppliers that you are reviewing your costs, which have to be reduced. Then prepare to negotiate, and to comparison shop.
6. Stay alert
Monitoring your cost-management strategies is vita
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
l. You need to watch that staff members don't slip back into old habits, the supplier charges correct prices, and service matches the agreed specification.
Using consultants
Most Australian companies do not have the staff resources to be able to regularly review expenses and reduce costs nor the time to monitor the market place or their suppliers. So a company might consider using a cost management consultant to expertly manage the situ
Using consultants
Most Australian companies do not have the staff resources to be able to regularly review expenses and reduce costs nor the time to monitor the market place or their suppliers. So a company might consider using a cost management consultant to expertly manage the situ
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
ation. The question that executives might ask themselves, however, is whether or not the savings will justify the sometimes substantial fees that may be charged.
The first thing to consider is what a consultant might actually be able to do for a company. For instance, does the consultant have a demonstrated track record of achieving cost reduction and the resources to deal with your sized company?
Then there is the question of the fee a
The first thing to consider is what a consultant might actually be able to do for a company. For instance, does the consultant have a demonstrated track record of achieving cost reduction and the resources to deal with your sized company?
Then there is the question of the fee a
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
d how it will be paid. Arrangements can range from a fee for service to a contingency fee (a fee that is based on results). A consultant who receives their fee entirely from the supplier cannot be assumed to be independent.
Where a contingency fee is charged, it is generally expressed as a percentage of the savings obtained over a period of one year. The usual figure is around 50 percent, although lower percentages can be found.
This mi
Where a contingency fee is charged, it is generally expressed as a percentage of the savings obtained over a period of one year. The usual figure is around 50 percent, although lower percentages can be found.
This mi
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
ght sound a lot, but look at it from the consultant's viewpoint. They are bearing all the risk in proposing a contingency fee as they are undertaking a lot of work 'up-front' before being entitled to any fee. If no savings are found, then no payment is received.
For instance, these are the steps a consultant might need to undertake where a change of supplier is deemed necessary:
(a) The company's category spend is analysed in detail to
(a) The company's category spend is analysed in detail to
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
form the basis for selecting an appropriate supplier so that that suppliers will fully understand the company's needs.
(b) Tender documentation is prepared to ensure that there is full understanding of what is required from suppliers and that they have sufficient information to be able to offer the most favourable rates.
(c) A detailed review of the tenders received is undertaken to ensure the best decision.
(d) The implementation pro
(b) Tender documentation is prepared to ensure that there is full understanding of what is required from suppliers and that they have sufficient information to be able to offer the most favourable rates.
(c) A detailed review of the tenders received is undertaken to ensure the best decision.
(d) The implementation pro
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
ess, which typically takes 6-8 weeks, is actively managed.
(e) Once the new supplier is in place the bills are checked to ensure that the correct rates are being applied, and 'teething' problems are resolved.
(f) Continued reviews are undertaken over a set period, depending on the overhead category, to ensure that the company receives all that it expects from the new arrangement.
(g) Finally, the company is helped to understand movemen
(e) Once the new supplier is in place the bills are checked to ensure that the correct rates are being applied, and 'teething' problems are resolved.
(f) Continued reviews are undertaken over a set period, depending on the overhead category, to ensure that the company receives all that it expects from the new arrangement.
(g) Finally, the company is helped to understand movemen
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
ts in rates so that rates can be renegotiated with the supplier in accordance with general movements in the market.
Fred Marfleet is the chairman of Expense Reduction Analysts. ERA is an international cost management consultancy operating in over 20 countries.
For more information call (02) 9922 7999, email info@expense-reduction.com.au or visit www.expense-reduction.com.au
Fred Marfleet is the chairman of Expense Reduction Analysts. ERA is an international cost management consultancy operating in over 20 countries.
For more information call (02) 9922 7999, email info@expense-reduction.com.au or visit www.expense-reduction.com.au
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.e-folder.org.ua/article/45244/e-folder-Why-9-in-10-Businesses-are-Overspending-on-Daytoday-Expenses.html">Why 9 in 10 Businesses are Overspending on Day-to-day Expenses</a>
BB link (for phorums):
[url=http://www.e-folder.org.ua/article/45244/e-folder-Why-9-in-10-Businesses-are-Overspending-on-Daytoday-Expenses.html]Why 9 in 10 Businesses are Overspending on Day-to-day Expenses[/url]
Related Articles:
The Anatomy of a Brain Cramp; The Retainer and the Lavalava - Communication
Same Old, Same Old PR Still Tops
Communicate to Connect: The Power of Attunement
Bookmark it:
|