Five Step Process to identify broad saving potential in an organisation
Hi Folks, Many of us work upon looking at the performance of company by analysing their balance sheet and P&L statement but when a management consultant looks at an organisation, he additionally looks at cost saving opportunities as well. Here i am going to easy five steps which needs to be followed for identifying the cost saving potential Step 1: Get the Trial Balance of the company/Organisation. Trial balance will contain details of all the expenses against each header incurred during the FY Step 2: Analyse expenditure % for each broad header in Trial Balance . This will provide an overview/idea on distribution of expenditure. This will also indicate which area needs focus and which cannot be touched. Example: % Expenditure of Raw Material cost, Manpower Cost, Indirect expense etc. Step 3: Benchmarking expenditure as % of revenue with peers or past performances . Another crucial step here is benchmarking. In order to identify the scope of improvement, it is essential to compare ...