With global recessions, increasing oil prices and increasing competition, saving money wherever possible and thereby maximising profits is the name of the game.

Identifying areas for potential savings can be daunting although you need not fear the process as there are several simple ways to reduce business costs.


Depending on the size of the company, automation may be something to consider. Unfortunately, there are often start-up costs that can be seemingly significant and can deter from taking the plunge. However, it is important to consider the benefits and keep those in sight. Automation, especially when it comes to data entry, transfer or consolidation is incredibly useful. Not only is data entry more accurate, thereby reducing downtime from error checking or damage control, but also a person costing your business an hourly wage is not tied up manually entering data.

Inventory Management Software

Inventory management software is a fantastic product for facilitating the control of inventory. It is custom-designed to appropriately manage inventory data from a central location but is also accessible from anywhere with an Internet connection. Part of its management of inventory data is the ability to manipulate data and derive meaningful trends and predictions of sales. As you can imagine, being able to even partially predict future sales with some degree of confidence is infinitely useful with ordering and production planning.

By having a certain degree of certainty with production and ordering, the company can suddenly take advantage of any bulk or clearance discounts which may normally have been too much of a risk. Not only this, but by ordering the approximate volumes of materials for predicted demand means that the company can do away with overordering for the just-in-case scenario of running out of stock. This represents a significant step towards greater control, reduced wastage and cost savings.


It is important to have a good understanding of the value of products and time and then meet a supplier head-on, requesting a reduction in prices while still considering their side. From your supplier’s perspective, they should be kept on their toes, rewarding your ongoing custom with competitive pricing. If you feel competition has increased and your long-time supplier has not met competitor pricing, then it may be time to give them a little gentle reminder.

Specifications and knowing your product

Sometimes the best product is not always a necessity and there may be fantastic, non-branded items which are perfectly sufficient and which can result in a huge cost savings. It takes a strong knowledge of your product, its components, the suppliers and their product to confidently make any decisions about switching to a non-branded product. However, the potential savings represents are a great opportunity so doing so should not be discounted.

Freight Costs

A large part of the costs associated with product can be attributed to freight, and a customer will sometimes also use freight costsas a decision point about which supplier to proceed with. As such, it is important to be competitive with your freight costs as well as your product costs. To do this, you will need to research freight companies and ensure you are receiving the best deals and service. Understand what factors affect freight costs so that you can build these into your production plan.

Lean Processing

Identifying ways to maximise production time, minimise downtime and make the most of employees’ time is a great way to reduce costs associated with overheads and production. For example, by organising the warehouse in a systematic way using recognised lean storage and manufacturing techniques, employees’ time spent searching for items or walking from place to place to retrieve items can be drastically reduced. Likewise, by understanding production times and what can be cut down and what must be preserved you are likely to achieve higher production throughputs. Often, a company does not actually need more equipment to handle greater volumes of production, they simply need to ensure their current equipment is utilised better.