The UK’s business environment is grappling with the dual pressures of curbing costs while ensuring the quality and efficiency of services and products remain intact. Eman Al-Hillawi, CEO of Entec Si, has outlined several approaches that organisations can adopt to meet these challenges effectively. Speaking to Consultancy.uk, Al-Hillawi emphasised the importance of sustainable solutions that are well-received by employees.
As businesses evaluate their cost-cutting measures, Al-Hillawi suggests that a less disruptive initial focus should be on re-examining long-term supplier contracts. He highlights a common predicament faced by organisations of varying sizes where legacy contracts may no longer align with current operational demands. This situation often leads to the 'loyalty-penalty', where long-term customers inadvertently pay more than newer ones for the same services.
Effective communication with suppliers can mitigate some of these issues. However, Al-Hillawi notes that maintaining relationships can be complex due to the intricate web of departmental needs, stakeholder requirements, and the challenge of ensuring value for money. As a strategic remedy, businesses should conduct a thorough audit of their expenses and consider adopting automated contract management tools to facilitate regular market comparisons and renegotiations.
Consolidating services by working with fewer suppliers can be beneficial not only for reducing costs but also for simplifying administrative burdens linked to contract management. This approach allows businesses to reinvest the time and resources saved into initiatives that add value.
Al-Hillawi points out that evaluating different types of contracts is crucial. Performance-based contracts, which tie compensation to specific performance criteria, may offer strategic advantages over standard fixed-fee agreements. This model helps to ensure that goods and services delivered maintain high quality while also providing tighter budget control.
While the enduring temptation among businesses can be to select the lowest-cost provider, Al-Hillawi warns that such choices do not necessarily lead to effective cost-savings. It is essential for decision-makers to assess the quality of goods and services in addition to their costs. Strategies such as negotiating discounts for early payments or bundled services, and sourcing locally to decrease shipping expenses, can facilitate better fiscal outcomes without compromising quality.
In an evolving economic landscape, flexibility is vital in contract negotiations. Al-Hillawi suggests that legacy contracts often lack the necessary agility to adapt to new legal and regulatory standards. Consequently, introducing flexible frameworks that allow for scalable terms can better accommodate shifting business requirements.
However, changes in suppliers must be carefully managed, with considerations for the existing workforce who may find themselves transitioning to new systems and processes. Al-Hillawi underscores that transparent communication is critical during these changes, advising that open conversations can alleviate employee apprehension about new arrangements.
The consultancy CEO concludes that in today's economic climate, leaders should Adopt high-impact strategies, focusing on performance-based contracts, consolidation, and compliance. These approaches can yield substantial savings while preserving operational efficiency and nurturing strong internal relationships, ultimately supporting sustainable growth in the face of cost pressures.
Source: Noah Wire Services