Category Archives: Tip
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How to set up the world’s simplest procurement process
Posted on November 19, 2011 by hudgeon in Processes, TipIn Tip #012: How to build your own Cost Analysis Monte Carlo Simulation in Excel or Google Spreadsheets, I used procurement as the sample workflow to show how you can use a Monte Carlo simulation to convince your stakeholders your transaction cost estimates are accurate. Applying this calculation to a procurement process typically results in total transaction [...]
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How to prepare simple, effective cost management reports (part 2)
Posted on September 22, 2011 by hudgeon in Cost management program, Organisational change, TipThe Cost Reduction Tip Tip #21 provided an overview of the company we are looking to prepare cost management reports for. To summarise, ABC Services provide software and consulting in the facilities management sector have one office in Sydney and another in Melbourne the bulk of their revenue comes from the sale of asset management software [...]
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How to prepare simple, effective cost management reports (part 1)
Posted on September 14, 2011 by hudgeon in Cost management program, TipThe Cost Reduction Tip Effective management accounts are critical to a cost reduction initiative. Without it, your stakeholders can’t see that their pain is justified. It’s like the difference between running on a treadmill (without a watch or odometer) and running through the countryside. If you have a destination and can track your progress, your [...]
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Teach your old vendors new tricks
Posted on September 9, 2011 by hudgeon in Processes, Technology, TipThe Cost Reduction Tip In the 1970s and 80′s, skateboarding went through a renaissance. Difficult tricks became commonplace and impossible tricks became possible. The invention of polyurethane wheels in 1972 and the US drought in 1976 (which led to the draining of concrete pools) kicked off these advances but it was not until groups of [...]
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How to identify cost reduction opportunities
Posted on September 7, 2011 by hudgeon in Organisational change, Processes, TipThe Cost Reduction Tip Certain problems when you first look at them seem intractable. But once you understand their natural fracture lines, breaking them up and solving them is actually quite easy. Most business process problems fall into this category and cost reduction problems are no exception. The natural fracture line for cost reduction opportunities [...]
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Commbank’s annual report reveals dramatic variability in operating efficiency
Posted on August 27, 2011 by hudgeon in Cost management program, TipThe Cost Reduction Tip Today’s tip isn’t really a tip so much as a mini-case study. Looking through Commbank’s annual report, I was struck first by the impressive 39% operating efficiency of their Retail Banking arm (typical financial services operating efficiency is around 45%) and second by the variability in operating efficiency across the business [...]
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Change your processes before implementing new software
Posted on August 23, 2011 by hudgeon in Organisational change, Technology, TipThe Cost Reduction Tip The success rate of software implementations is woefully low. There are lots of reasons for it ranging from overselling by vendors, overspecing by customers, lack of consultation with stakeholders, under-resourcing the implementation team, etc. But in my view, much of the source of failure comes from unnecessarily bundling high risk process [...]
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Simplify your supply chain
Posted on August 22, 2011 by hudgeon in Suppliers, TipThe Cost Reduction Tip Over the past 12 years I’ve looked at the sourcing, procurement and payments processes in 150+ companies spanning every continent except Antarctica. At a detail level, the best of these companies took very different approaches to managing their suppliers – approaches tailored to the subtleties of their industry, geography and economic climate. [...]
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End “administrative incoherence, blurred authorities and reluctance to accept managerial risk”
Posted on August 20, 2011 by hudgeon in Cost management program, TipThe Cost Reduction Tip Today’s tip is quote from a yet-to-be released report calling for dramatic cuts to the administrative overhead of the Canadian military. Today’s Globe and Mail has printed key parts of the 80 page report prepared by Lieutenant-General Andrew Leslie, Canadian Forces Chief of Transformation. The printed excerpts could serve as a blueprint [...]
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How to build your own Cost Analysis Monte Carlo Simulation in Excel or Google Spreadsheets
Posted on August 17, 2011 by hudgeon in People, TipThe Cost Reduction Tip After posting yesterday’s tip, I’ve received a few requests to explain how the Cost Analysis Monte Carlo spreadsheet works. I hope you find this post useful. Background The Cost Analysis Monte Carlo spreadsheet calculates the range of monthly resource costs for a seven-step activity – in this case the monthly cost of processing [...]
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