Cost reduction and maintaining quality of service
Employee Training
Byadmin-hubtek |
16 February, 2023 |

Due to economic conditions, companies are facing difficulties and challenges in cost reduction and maintaining quality of service.   

Due to current economic conditions, companies are implementing different strategies that will enable them to continue operations as normally as possible. Cost reduction is one of the things that we’re hearing a lot about; but there will be a huge challenge if, as a company, we decide to do this.  The challenge is in maintaining the quality of our services because most likely, that is the main reason our customers decided to work with us.  According to Dr. Madhav Durbha, on the website Logistics Viewpoints, “As costs pressures build up, organizations need to get creative in increasing the focus on cost optimization while ensuring resilience and business continuity.” 

We spoke with experts in our company, and this is what they had to say: 

Joel McGinley, Managing Director at Hubtek said that true cost reduction is really a function of improving your productivity.  “As your productivity increases, you get more output from your people, so you’re getting more at the same cost, but as a percentage of the cost to overall revenue, your costs come down. So, you really want to implement more of a process improvement and technology plan to get a true long-term cost reduction. That’s the way you can gain both the reduction of costs, as well as the increase in your business and growth.” 

He shared that if you just cut costs, you run the risk of losing those resources that are going to produce the revenue; but if you can make your existing people more productive, and give them the opportunity to increase your revenue, you’re going to be far better off for the long-term.  He maintains that, for you to gain the benefit of both cost reduction and growth, you really want to look at increasing productivity through process improvement and technology solutions. 

“I know with our Hubtek solution we’re getting good productivity increases for our clients. We’re reducing the cost of labor as a percentage of revenue and/or gross profit.  Although the total dollar amount isn’t necessarily going down, the increase in revenue at a flat cost basis gives them cost reduction as a percentage of their overall revenue. So, process improvement, investment in technology, that’s really where you’re really going to get cost reduction while continuing to grow.” 

Alejandro Muñoz, Hubtek’s Growthmaster affirms that these days, everyone’s having a hard time predicting where the economy’s headed. “Sometimes, companies need to react quickly when recession and higher inflation whisperings are knocking on their doors.  However, we as managers need to hold our horses and think outside the box to get a better picture of what´s going on and figure out what we can do to reduce costs without impacting the quality of service. In addition, we’re in a post-pandemic environment that has brought additional challenges to which we need to adapt.” 

He believes that technology can greatly impact how we adapt to those challenges, by reducing costs without affecting the quality we need to deliver. “Through automation, we can be more cost-effective by automating those time-consuming tasks, enabling us to provide the same or an even more accurate level of information in a fraction of the time.  Freeing up more time will allow us to focus on bringing more value, being more creative, and developing those cost-effective strategies that will set us apart from our competitors in how we face challenging times.” 

He summarized by saying that to keep the quality of our service while reducing costs, we need to support our processes with technology, being open-minded to new ways of doing things, supported by trustworthy partners. “Let´s think outside the box, dreaming of how we can do better for our customers by making our operations smarter.” 

Finally, we heard from Andrew Gulovsen, CMO at Hubtek.  He shared that as the economy shifts, focus on cost-savings becomes a priority. However, maintaining quality becomes a key concern. The market has many options to find cost savings, both at the onset and more long-term, around labor solutions, technology tools, and support for our teams.  However, it shouldn’t be centered around the question “what can we do without?”, but more about, “how can we do what we do better, with the resources available?” 

He also believes that it is important to understand how the changes in the market are affecting your top and bottom line, and to build a plan that addresses both sides of the P&L.  “On the top line, what are the ways to stabilize and grow?  So, the utilization of quoting tools and improving processes, focusing on expanding current relationships and capturing market share.  On the bottom line, asking, “how can we negotiate better to drive up margin per load?”.  Find ways to grow a team using the options that the market has available, such as diversification and using remote workers in locations where salaries are less. Understand that just because the dollar per employee may be less doesn’t mean that the quality is diminished at all.  With proper training and proper leadership, a great team can be built from anywhere, with the right plan, the right tools, and the right attitude.” 

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