UNDER EMBARGO UNTIL 24 June 2016 09:00
“We know we could save money and be more efficient but we choose not to because we’re in fashion…” This view from the Financial Director of a leading UK fashion retailer may seem surprising but is not unique. Fashion businesses major on style, aesthetics and design to keep ahead and build brand strength and loyalty.
While this may explain a different spend profile to other types of business, none of these considerations explain why a business shouldn’t also carefully control costs and be mindful of every penny spent. Creative businesses can sometimes see these two things as competing for attention, as a zero-sum game…. style vs substance, looking good vs looking cheap.
Achieving best value should be the goal regardless of the sector in which you operate – meaning the best possible commercial deal on goods or services that meet your requirements, no matter how luxurious, rare, bespoke or expensive those requirements might be. Why not be as efficient as possible and get the best deal anyway?
Ivo have worked with some of the UK’s leading fashion retailers to help address a lack of cost focus and deliver great value. These projects require high levels of governance, planning and project management but, when implemented successfully, can lead to significant long term benefits.
Ivo’s Top Ten Tips on how to deliver Cost Consciousness in a creative business:
1. Led from the Top
Any strategic initiative requires senior sponsorship in order to succeed, particularly if it aspires to change culture within a business. Ivo recommends a senior-level sponsor who can secure buy-in from the CFO and CEO. Board level advocacy for the project will help remove blockages and drive change throughout the organisation. A regular slot on the agenda of monthly board meeting is a practical way of prompting each director to contribute to, and report back, on the project.
2. Company Wide
All too often the role of managing costs is left to the procurement team. It is important to get departmental teams to take responsibility for their own budgets and savings, supported by central functions such as Procurement and Finance. Every department of a company should be exposed to new ways of working and feel a key part of its success.
3. Time it right
The arrival of new board members or intense competitive pressure can be the perfect moment to launch a project of this type. The business will be in a state of flux and a cultural shift may be easier to achieve, particularly if the new leadership is supportive of the planned changes.
4. Recognise it is a cultural shift for the company
Successfully delivering a change project inevitably involves dealing with naysayers and sceptics. One strategy is to build early momentum and achieve quick wins by including shorter term projects. Getting numbers on the board quickly generates positive impetus and helps to illustrate the benefits of this type of cultural shift.
5. Use a Project Management Office
Establishing a Project Management Office (PMO) is an important step. This is typically a small team, with the responsibility for building the awareness of the project, coordinating disparate work streams and keeping the project on track without large overheads. The PMO has the key communication role of creating project status updates and briefing senior management.
6. Reward the champions, identify the doubters
A companywide initiative will challenge norms and current ways of working. The PMO can drive the project forward but needs advocates to make workstreams their own. These champions can make the project relevant and important to their teams, creating a sense of urgency. The company should look for a quick way to recognise and reward these champions.
7. Make all benefits welcome
A mixture of initiatives helps to position the project as more than simply a cost reduction drive. Opportunities to improve efficiency and revenue, or reduce waste and customer complaints should be evaluated and qualified in the programme. Hard and soft benefits all contribute and help to reinforce the company’s desire to change.
8. Scope and scope again
The scoping process is most successful when it reaches all departments and levels of the company – both senior and junior. Often the best ideas have been lying dormant for some time. The best way to create a strong shortlist of workstreams for further discussion and investigation is to get out there and meet people!
9. Specify tightly whilst embracing the brand
Delivering best value does not mean compromising on quality or aesthetics. By refining specifications and clearly explaining requirements, the company can source great quality goods and services whilst delivering on customer expectations and the brand promise. The project office should work closely with teams to review all relevant specifications down to the smallest tag and label.
10. Plan for the long haul
To bring real cultural change, from Shop Assistants through to Designers, new behaviours and working methods need time to become established. Ivo recommends the PMO and those responsible from each work stream, regularly report results to senior management for at least 18-24 months. This encourages cost consciousness to become business as usual.
The Ivo effect:
Ivo understands the importance of style and design in this fast paced market and believes that there shouldn’t be any part of the business designated as ‘off limits’. The ultimate aim is to create a culture where cost consciousness actively supports the brand values rather than threatening them. The most successful creative businesses work hard to make this a reality.
Ivo Business Solutions works with business leaders to achieve significant improvement and change. This includes strategic and operational improvement – with an emphasis on action.
We provide focused, commercial and data-driven insight to answer difficult questions, identify savings and revenue growth.
Established in February 2003 – Ivo’s credentials come from running cost reduction and procurement programmes for nationally recognised organisations, particularly within the retail sector.
- We take a whole business view of opportunity and risk.
- Have commercial drive and the passion of a business owner.
- And apply curiosity, focus… and deep data analytics.
Business owners, CEOs, and private equity firms hire us because we don’t take anything at face value, accept filtered information or averages – we are trusted to do a great job.
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