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How to improve my current cost structure in business management

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Sep 28, 2020 9:44:33 AM
cost structure in Business Management

The costs are the expenses incurred for the manufacture of a product or costs to provide a service, the great challenge facing companies is how to decrease so that they can build competitive advantage that allows commercialize them a product or service at a lower price than the competition and earn money to achieve this without compromising the customer service.

Companies that sell to other companies face a greater challenge compared to those that sell to the end customer, since business customers are more sensitive to price and customer service, thus, they face a greater challenge of how to decrease your costs in commercial management without damaging the service, as I mentioned in a previous blog entitled What is a B2B eCommerce and why is it important for your company to sell 24x7? In that article I mentioned that: “It is clear that the ability to serving customers in a traditional way is very limited based on the fact that a vendor usually has a working day of 8 hours a day, between 5 to 6 days a week ”, therefore, under the traditional business management model where we depend 100% of vendors to manage customers it is very difficult to reduce the commercial cost, as well as increase the average billing per customer.

 

So, what is a good way to reduce costs?

In the optimization and reduction of costs, management plays an important role, since it encourages the search for: improving processes, technological innovation (both processes and products and services), as well as a correct selection and allocation of resources. In addition, the company must involve the majority of the personnel in the cost reduction processes, which promotes a habit of continuous search for cheaper alternatives and a change of culture in the company that encourages and promotes active actions in the face of costs and reduction of the same.

As we have just mentioned, two key factors to reduce costs are processes and technological innovation, elements that are the very heart of B2B eCommerce and that today make it the best alternative that a company can consider to reduce costs, improve processes and increase the average billing per customer. But as I know if my company requires the implementation of a B2B eCommerce, then we provide some elements to consider:

  • Cost of order processing: the management of order orders in a traditional model requires the participation of several people (vendor, data entry, enlist and dispatcher) although there may be systems implemented in the company require the intervention of staff, starting by the salesperson who must call the client or receive a contact from the client with an order, all this makes the client's management limited, complex to obtain a quote, not very agile.
  • Errors: under the traditional model in principle there are errors since there are many catalogs, prices and conditions that can vary from customer to customer, complexity for verification of SKU's, errors due to transcription when it goes from customer to seller.

 

  • Support costs: for adequate customer service we need to have staff that can manage and verify invoices with customers, process returns, provide information to verify order status and shipping information.

 

  • Costs of commercial management: printing of catalogs, price lists and physical samples, all these elements are required as support in sales management, and imply high printing and shipping costs, besides it is clear that they already have great limitations. Since the process of bringing new products to market is slower, it is difficult that if our portfolio is large that the seller can show everything at the same time, nor does it provide the ability to easily show comparable products if something is out of stock or if a product.

 

 

It is clear that if you identify yourself with these elements and see it as a challenge in your company, analyzing the B2B eCommerce model may be the key to improving the current cost structure in your business.

 

Likewise, to have some additional elements that will help you in this analysis process, we invite you to download this eBook called: "Cost Economy"

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