More than 50% of the S&P 500 is experiencing cost creep in 2012. That is to say that costs are increasing faster than, or in lockstep with, revenues. As uncertain economic conditions, rising input costs, and lower consumer demand are continuing to place significant strain on corporate margins, it comes as no surprise that CFOs [...]
Read more(CFO, 29 March 2012) In Brief: As part of a broad “transformational strategy,” one electronics retailer will cut $800 million in costs over the next three years. While closing stores, the company will also open smaller specialized outlets and expand in China. Our View: Despite the tremendous effort companies put into cost cutting initiatives, very [...]
Read more(Business Finance, 23 March 2012) In Brief: Business travel increased 8.3% in the third quarter of 2011 and is expected to rise 4.6% in 2012. Consequently, companies should be aware of the US cities with the steepest taxes for travel and entertainment (T&E). Cities with high “meals tax” rates include: Minneapolis (10.8%), Chicago (10.75%), Virginia [...]
Read more(CFOworld, 8 March 2012) In Brief: Developing cost structures that can respond and adapt to “sudden market reverses” is the top priority for companies, according to a new report. CFOs also want to get more value out of technology investments and improve their teams’ analytic, forecasting, and modeling capabilities, but those efforts may be hampered [...]
Read more(Smart Business Network, 1 March 2012) In Brief: Listen to the customer’s voice. Keep a “continuous improvement” mindset. Come up with the best solution and perfect it. A six sigma expert discusses how to get better results from the concept. Our View: R&D organizations with above-average, on-time project completion rates enjoy operating margins 15% higher [...]
Read more(Strategic Sourcer, 23 February 2012) In Brief: Target beat market expectations last quarter as the company lured shoppers through sales and discount specials that the retailer offset with greater focus on such cost reduction measures as strategic sourcing. Our View: The average procurement organization can realize savings of $100 million through increased coverage and greater [...]
Read more(Industry Week, 15 February 2012) In Brief: Even when companies have a strong strategy for implementing Lean methods, they often have trouble getting workers to support the process. This writer offers four strategies: 1. treat employees like customers, 2. create a multistep strategy, 3. learn to overcome the “no”, 4. call in reinforcements. Our View: [...]
Read more(Manufacturing.net, 10 February 2012) In Brief: Like Six Sigma and Lean Product Development, Value Engineering is a methodology used by companies to assure the greatest functionality is provided at the lowest cost. Although the discipline is often used to redesign existing products, this writer says that “true Value Engineering focuses on maximizing the function-cost balance [...]
Read more(Forbes, 10 February 2012) In Brief: The writer says that the average drug costs $4 billion to $11 billion to develop. His calculation compares the number of drug approvals for the companies to the overall cost of R&D spend as reported in the major pharmaceutical organizations’ annual earnings filings over the past 15 years, adjusting [...]
Read more(Wall Street Journal, 2 February 2012) In Brief: A major pharmaceutical company is restructuring its R&D group to rein in costs and shrink operations. The reorganization is intended to create a more focused portfolio as the company aims to become “a simpler and more innovative R&D organization with a lower and more flexible cost base.” [...]
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