CFOs Must Provide Leadership to Create a Culture of Continuous Cost Reductions

On average, each $1 in cost reduction can equal $5 in new revenue. In an economic environment where sales are flat and customers resist price increases, cost reduction becomes the primary way to improve the company’s bottom line and increase shareholder value. Companies have traditionally viewed cost reduction as a one-time annual exercise. For CFOs to drive meaningful improvements in a company’s financial and operational efficiencies, cost reduction should be an ongoing process. Typically the major barrier to continuous cost reduction is not from suppliers; instead, the internal resistance to change by employees is often the primary reason companies can lose out on valuable cost reduction opportunities. This is why the ability to see these opportunities is a good skill to look for in your CFO search.

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