How an Expense Reduction Franchise Can Justify Its CostsPublished by
Miles Lee on 12/24/2012
How an Expense Reduction Franchise Can Justify Its Costs
An expense reduction franchise is often faced with the thorny issue of being able to justify its costs. It's not actually that hard, since the expense reduction franchise gets paid based on their performance. They get half of all the savings they help their client companies realize — the more savings the expense reduction specialist finds, the better he or she does.
The problem is, there are people who believe their business doesn’t need to cut costs. If a company is profitable, expense reduction may not take priority in many employees’ or executives’ eyes. Or they may be skeptical about working with an expense reduction franchise like yours.
Here’s an example of effective expense reduction that may turn those skeptics into believers - and into clients for you. Recently, one of Alliance Cost Containment's franchise owners worked with a chemical manufacturer to see where they could streamline their financial operations. Simply by analyzing the chemical manufacturer’s insurance policies, our expense reduction franchise helped the company eliminate duplicate coverage and reduce expenses by 13.8% — or $154,000 — in just one year.
Think of what that means for the company. That's two or three employees' salaries. Or a small bonus for the employees. Or it's bottom line profits that benefits everyone.
Many managers today operate with the philosophy that it’s better to avoid cost increases rather than to continuously drive expense reductions. The problem is this could result in costly business practices sprouting like weeds within the company.
By working with an expense reduction franchise, your clients can get an objective, no-nonsense look at their bottom line. You can show them where to save, without cutting salaries or slashing important budgets.
Your analysis could prove that the company is performing at an optimal financial level, or you could show them how they could start saving thousands of dollars by following your expense reduction principles.
By showing companies how to work with an expense reduction franchise, you can create a proactive cost management approach within the organization that will serve them well for years to come.
How a Cost Containment Firm is Different from a Group Purchasing OrganizationPublished by
Miles Lee on 12/17/2012
How a Cost Containment Firm is Different from a Group Purchasing Organization
A cost containment firm like Alliance Cost Containment is different from a group purchasing organization (GPO) in a number of important ways. Many hospitals and healthcare organizations already have relationships with GPOs, so they think it's unnecessary to work with a cost containment firm.
But there are enough important differences between the two, that the cost containment firm ends up being the better choice with more cost savings.
How?
For one thing a GPO only done one thing: it manages supplier networks, and that's it. It doesn't consult, it measure true savings of the hospital or healthcare organization to find out how to improve margins and profits. A cost containment firm can re-negotiate vendor agreements, find and eliminate duplication of efforts, and even help streamline your workflow processes. If a GPO’s vendor can't buy it, they can't work with it.
Yes, a cost containment firm also has leveraged buying power it can use on behalf of all its clients. For example, they may have a relationship with a cell phone supplier, and by exercising its mass buying power, it can get better monthly deals for all its clients.
But there's more. A GPO gets paid by the suppliers and vendors in its group, based on the sales it generates. They're motivated to sell as much as they can, whether you need it or not. But a cost containment firm is paid on their performance. They want to find savings, not spend your money. Remember, "savings" = less money to a GPO.
GPOs also depend on administrative fees paid by group members (i.e. you) in order to continue working. A cost containment firm works independently, and fees are based on a percentage of your savings. If you don’t save, you don’t pay.
Keeping your operating costs as low as possible without jeopardizing the quality of service to your patients is one of the easiest and most efficient ways for your healthcare organization to improve your margins. If your organization needs a risk-free way of maximizing profits, consider working with a cost containment firm.
A firm like Alliance Cost Containment has the ability to closely analyze your firm’s financial situation and expense data, improving your bottom line by negotiating lower rates from your suppliers and by improving workflows within your operations. They're more than a one-trick pony, like a GPO. A cost containment firm can give you all the tools you need to succeed.
Expense Reduction Hurdle: Won't Service from My Vendors SufPublished by
Miles Lee on 12/11/2012
Expense Reduction Hurdle: Won't Service from My Vendors Suffer?
One expense reduction hurdle a lot of cost containment professionals face is the clients' fear that they're going to lose their vendors’ excellent service, especially if they stop paying at their premium levels.
This is a myth!
The old saying, "they're more afraid of you than you are of them" comes to mind. What's really going on is the vendors are usually very afraid of losing the client's business completely, especially if the client has been paying full price. But as an expense reduction professional with Alliance Cost Containment, you can help your clients overcome this fear by proving that service from their vendors won’t suffer simply because they pay a reduced rate.
Often, the vendor’s sales representative will try to fill clients with fear, uncertainty, and doubt (FUD) when they face pricing pressure. This fear can seriously affect your cost management efforts, because when faced with the thought that vendors’ service will suffer if they're paying less, they'll convince themselves the premium prices are worth it.
But think about it: if they're paying less, the sales representatives receive less commission. So they're not inclined to turn down higher sales. However, they also have no input into the services the client receives. They're in sales, but it's the rest of the company that does fulfillment.
Expense reduction professionals can help companies negotiate better rates and keep that same quality service they have come to expect. They'll often negotiate with the vendor's decision maker (i.e. not the sales rep) to get the best prices and service.
Next, negotiate a longer term contract in order to receive reduced rates. Expense reduction is all about finding value. If a contract is structured properly, you can renegotiate prices if market rates change, and you’ll get more value for your services now by negotiating prices this way.
Expense reduction principles show us that low prices and great service are not mutually exclusive.
Vendors will appreciate the repeat business, and your clients will be able to get the same great service, but with additional expense reduction and improved profits.
Expense Reduction Hurdle: The Job Will Become Harder Published by
Miles Lee on 12/3/2012
Expense Reduction Hurdle: The Job Will Become Harder
One expense reduction hurdle that many chief cost containment officers have to overcome is the "my job will become harder" belief that many CFOs and finance professionals have. They don't want to undertake an expense reduction campaign because they're worried it means more work for them. Even when you consider that they can often reduce expenses deeply enough to hire someone, or even allow them to keep their jobs more easily, many financial professionals don't want to take on a new cost reduction campaign, because of the ongoing work it's going to involve.
But hiring an outside expense reduction consultant, like Alliance Cost Containment, can solve this problem, because the consultants can keep track of the expense reduction campaign, saving thousands of dollars, and avoid adding extra work to an already overworked staff, and preventing the need for hiring another staff member.
Everyone in your organization, including you, can learn and implement new ways to reduce and control costs by utilizing advice and lessons from the cost containment expert. It’s virtually impossible for anyone to be the subject matter expert in cost reduction and to keep up with the many responsibilities of an executive. But as every successful executive knows, working with an outside consultant — surrounding yourself with people smarter than you, says the old business adage — can enhance your job performance and add to your accomplishments, rather than weighing down your workload.
Alliance Cost Containment’s main goal is to help their clients improve efficiencies, eliminate duplication of efforts, and to be the subject matter expert in expense reduction so that the finance department can focus on managing the company’s overall finances.
Broad-reaching cost reduction is integral to your company’s success, and working with an outside expense reduction firm will eventually pay off on both an individual and company-wide level, making it possible to improve overall profits.
Owning an Expense Reduction Franchise Has Its BenefitsPublished by
Miles Lee on 11/26/2012
Owning an Expense Reduction Franchise Has Its Benefits
Owning an expense reduction franchise allows managers and executives to branch out on their own and to take control of their own careers. Their decisions would not only directly impact their own company, but their clients' companies as well.
Owning an expense reduction franchise comes with its own set of responsibilities and challenges. One responsibility of owning a expense reduction franchise is that it is your job to keep expense reduction top of mind for your clients. These are typically CFOs, company controllers, and business owners.
As the expense reduction franchise owner, you will have direct and frequent contact with decision makers at the executive and ownership level. Working directly with high-level executives gives you learning opportunities that you can use every day as you grow your business. And as any business owner knows, it’s never a bad idea to form relationships with management and owners of other companies.
Another benefit of owning an expense reduction franchise is that you can get things done faster and more efficiently than if you were working for someone else. As someone in the expense reduction industry, you’re naturally inclined to find ways to work more efficiently. But if you had a boss to answer to or red tape to get around, that cuts down your ability to get things done quickly. As a expense reduction franchise owner, you would have the ability to be proactive, and get things done more quickly than a larger firm.
Third party expense reduction consultants also have another benefit. They take on the risk and reap the rewards. Of course, owning your own business has inherent risks. But as the saying goes: the greater the risk, the greater the reward. The better you become at managing risks and determining your business strategy, the more rewards you’ll see. In time, the business experience and C-level contacts you make will help you grow your business. Not only will your clients benefit from your depth of experience, but your firm will prosper as well.
Owning a Cost Containment Franchise Puts You In Touch With Many BusinesPublished by
Miles Lee on 11/19/2012
Owning a Cost Containment Franchise Puts You In Touch With Many Businesses
A cost containment franchise can put its owners in touch with many different businesses, covering many different industries and fields. Because of their work in expense reduction, the franchise owners are in a position to talk to as many executives and business owners as possible.
Expense reduction is something that many companies struggle with, typically because the CFO is too busy handling daily and quarterly tasks, and doesn’t always have the time to focus on finding ways to reduce costs. Many items can take attention away from continuous expense reduction. As a result, most companies need help when it comes to continuous expense reduction. This definite need for cost reduction assistance is just one reason why you may be interested in owning a cost containment franchise like Alliance Cost Containment.
As a cost containment franchise owner, you would get to be your own boss. Being a cost containment franchise owner comes with its own set of responsibilities and challenges. One responsibility of a franchise owner is to keep expense reduction top of mind for your clients.
As the expense reduction expert, you will have direct and frequent contact with decision makers. Working directly with high-level executives gives you learning opportunities that you can use every day. And it’s never a bad idea to know people in managerial positions.
The best part about working with CFOs, controllers, and business owners is that your expense reduction advice will have a direct impact on the company’s bottom line, and the health and success of the business overall. As a cost containment franchise owner, it's incredibly rewarding to see your suggestions used, and to see a company grow as a result of your hard work and recommendations.
Another benefit of being a cost containment franchise owner is that you are directly rewarded for your hard work. Firms pay you based on your performance. So the better you perform, the bigger the payoff. Not many jobs are as highly incentivized as a cost containment franchise owner. While the tasks you’ll face as a franchisee are not without their challenges, owning a cost containment firm is a career in which intelligent, diligent, driven people are directly rewarded for their hard work.
How Expense Reduction Can Help Small BusinessesPublished by
Miles Lee on 10/29/2012
How Expense Reduction Can Help Small Businesses
Expense reduction is tough during tough economic times. Businesses of all sizes are trying many different ways to save money, but most have reached the point where they need to think outside the box in order to truly impact their bottom line. Alliance Cost Containment can help. In order to help a business achieve lasting results from expense reduction, Alliance will closely examine a business’s daily operations and expenses and find ways for them to save money. By helping with expense reduction, companies are often able to be more profitable with much less effort than increasing overall sales.
With more than 20 offices in the US and Mexico, Alliance works with businesses of all sizes to reduce the costs of doing business. Alliance Cost Containment works with small businesses in many industries including convenience stores, law firms, banks, churches, health care offices, nonprofits, manufacturers.
Our franchisees work hard for small businesses to find easy-to-follow steps toward expense reduction. Some of these basic steps include:
* Replacing incandescent lighting with fluorescent.
* Reviewing telephone bills for errors and overcharges
* Implementing procurement cards and reporting systems
* Giving access to group purchasing discounts on office supplies and other products
* Facilitating formal reviews with vendors..
On top of basic tips like these, Alliance digs deeply into a company’s accounts payable files to find areas that need cost reduction. For example, one of our tactics is to closely assess the company’s contracts with service providers such as landscapers and janitorial services. After analyzing current market pricing for these services relevant to the scale of the client's business, Alliance can determine if they are getting the best value for their money.
If there are places that need expense reduction, we can use our depth of experience and bargaining power to help the client get the best price and service possible.
Small businesses are a staple of the American economy, and Alliance Cost Containment wants every small business to succeed. Alliance understands that expense reduction is a key part of the success of any size business, and we are dedicated to helping our clie
Cost Reduction Hurdle: It's An Ongoing Campaign, Not a One-and-DonePublished by
Miles Lee on 10/22/2012
Cost Reduction Hurdle: It's An Ongoing Campaign, Not a One-and-Done
As a cost reduction professional, you're going to face a lot of different challenges and daily distractions that make it difficult to deliver continuous cost reduction to your employer.
For example, as a natural function of their jobs, CFOs have their attention pulled in many different directions. Too often, other initiatives like budgets or financing can take the attention away from continuous cost reduction.
As a result, most company employees view cost containment as a series of one-time actions instead of as an on-going effort. Sales-related expenditures or quarterly budgets will frequently take top priority for a CFO, but as a chief cost containment officer, it is your job to keep these efforts top of mind.
In order to create significant cost reduction for a company, you must stress that continuous attention must be paid to reducing expenses. It is also important to be an educator to the CFO and his or her staff, because the word "continuous” is important, but it’s not as daunting as it sounds.
What "continuous” really refers to is the daily or weekly support given to your efforts. By providing ongoing support to the cost containment officer on a daily or weekly basis, the CFO and other financial staff are making cost reduction a part of the company’s standard operating procedures. With this serving as a continual goal, you are helping to set up your client for long term success.
There are always new efficiencies can be found by digging deeper, and as vendors improve their service offerings and technology advances, there are cost reduction discoveries to be made, even if they are more challenging to find.
Keeping this in mind, perhaps one of the most important reasons that continuous cost reduction is important is that if you’re constantly working to find improvements, then there will always be work to do. As a cost containment officer your job is never done, because there are always opportunities to reduce the cost of doing busisness.
Expense Reduction Hurdle: Sacred Vendor RelationshipsPublished by
Miles Lee on 10/15/2012
One expense reduction hurdle that our franchise owners see over and over from people are the sacred vendor relationships. The favored relationships that employees have with vendors are probably the single largest force of resistance to cost reduction. These cozy vendor relationships often cost the company money, whether the company realizes it or not. Usually, it takes working with an unbiased third-party expense reduction expert to point out the detriment that sacred vendor relationships have on a company’s bottom line.
For example, some companies may know they are paying a premium for a supply or service, but attribute that high price to excellent service quality, or to not wanting to potentially damage the relationship with the existing vendor. In other cases, a company executive may do business with a vendor purely because "that’s the way it’s always been” — a mindset which is the enemy to efficiency.
Other executives may hire friends or family members as vendors, fully knowing that working with that vendor comes at the expense of the company’s potential savings. However, it's important to remind your clients that they can reduce costs with their vendors that won't affect their relationship.
For example, you, the expense reduction specialist, can negotiate with the company owner or sales manager on prices and service terms. The vendor’s representative may be a valuable contact, but typically they are not the final decision maker.
Also, the sales representative doesn’t always have your client's best interest in mind, especially if they receive commission. Another way to achieve expense reduction with vendors is to negotiate a multiple-year contract in return for cost savings.
Overcoming resistance to change is a major hurdle in expense reduction. Sacred vendor relationships aren’t to be taken lightly and can seriously affect your client's ability to reduce costs.
Understanding the impact of sacred vendor relationships and not showing favoritism to any vendor is absolutely vital to the success of an expense reduction project
Neglecting Expense Reduction Leads to Hidden Losses`Published by
Miles Lee on 10/1/2012
Expense reduction is all about your firm’s bottom line, about enhancing your company’s performance by keeping operating expenses at a minimum. Reducing expenses requires precise attention to detail and a lot of hard work. By not paying enough attention to expense reduction, your firm is losing money every single day. Maybe you’re losing hundreds of dollars every day, maybe thousands.
So what is expense reduction? It doesn’t mean one-time cuts to budgets and salaries. On the contrary, it means closely examining your vendor relationships and finding ways to get the same great service at a reduced rate. it means removing unwarranted costs from daily operations, and translating those cost savings to an increase in profits. It means paying special attention to the cost of doing business, and taking steps to reduce those costs.
Part of expense reduction involves negotiating new rates with your vendors. However, negotiating new rates alone isn’t enough. Often, firms need at least one full-time staff member — a chief cost containment officer — who performs internal audits and reconciles invoices, in order to ensure that vendors don’t find ways to add on small costs like delivery fees, packaging fees, and more that might slip by unnoticed and add up quickly.
The key here is a sense of urgency. Reducing expenses is important, and can save thousands of dollars every month. Without expense reduction, and without a firm that can guide your company through the process, your company is losing tens of thousands of dollars — and maybe more — by ignoring the problem.
Let's say you can save $20,000 per month through expense reduction. If you decide you're going to wait until Spring before you look into this problem, you've lost $120,000. What does that $120,000 salary represent? Two or three staff members' salaries? A marketing campaign? New product research?
It's no longer how much a reduction campaign will cost, the question is now "how much are we losing by waiting?" If time is money, waiting is going to be expensive.Why Cost Reduction Can Cause Resistance at Your CompanyPublished by
Miles Lee on 9/24/2012
1) Fear of looking incompetent
In general, people are proud of their work and do not want to appear that they are doing a bad job. But the fear of looking incompetent often comes at the high price of an organization’s profitability. As a CFO, you can communicate that a third-party firm aids in long-term savings and continuous improvement, which in turn will help everyone succeed.
2) Sacred vendor relationships
Favored relationships that employees have with vendors are probably the single largest cause of resistance. These cozy vendor relationships often cost the company money, and usually require an unbiased third-party expert to point this out. To reduce costs, make sure you have a policy about accepting gifts and perks from vendors, and lead by example.
3) "My job will become harder."
Many employees fear that cost reduction will complicate their jobs because of the training and extra effort required. CFOs can counter this by prioritizing what areas require reduction to make the task more manageable. Creating small wins and recognizing victories goes a long way toward helping employees see the fruits of their labor.
4) Services with the vendor will be more difficult.
Some companies know they are paying a premium for a supply or service, but attribute that high price to excellent service quality. There are ways to reduce costs here which won’t affect your vendor relationship. For example, go directly to the company owner to negotiate. Or offer a multiple-year contract in return for reduced costs.
Cost reduction is vital to your organization’s success, and overcoming resistance to change is vital to the success of any CFO’s efforts in maximizing their organization’s profits. Audit Your Expense Reduction EffortsPublished by
Miles Lee on 9/17/2012
Your expense reduction efforts are an ongoing process. You can't just set up the process and then be done for the year, or expect things to work properly. Expense Reduction is not a set-it-and-forget-it endeavor.
It requires diligence, patience, and a precise attention to detail. To be truly effective, you must audit your expense reduction efforts on a regular basis. This can not be done just once per year. If you work with a chief cost containment officer they will more than strongly recommend doing this on a monthly or at least a quarterly basis, depending on the size of the spend being examined.
The importance of follow-up cannot be underestimated when it comes to expense reduction. It took hard work and persistence to convince vendors to lower their rates, so you need to make sure that they continue to honor them by providing the discounts they promised.
But this isn't always as easy as it sounds. Unless you have a dedicated staffer who examines and compares invoices on a regular basis, it can be very easy to miss extra fees a vendor might add on even after they’ve agreed to provide you with lower rates. You have to watch out for delivery fees, packaging fees, fuel surcharges, etc. If the vendor has agreed to pricing on many different SKUs each of these new prices need to be monitored. This can be tricky if there are hundreds, thousands or even tens of thousands of ad hoc products being purchased. Incorrect prices or additional fees will sometimes slip in unnoticed eating away at your savings, so you need to continually monitor the situation.
All of this follow-up might seem like a lot of work for your company’s finance or accounting department – and it can most definitely be time consuming. But a chief cost containment officer can help monitor everything. They can also do it quickly and efficiently since expense reduction is all that they do, they have tools to assist and they were instrumental in setting up the expense reduction plan.
A chief cost containment officer specializes in auditing your costs, closing gaps, checking for duplication or inefficiencies, and in making sure that the savings they have negotiated for you from vendors are hitting your bottom line and providing immediate savings. Without auditing, or a chief cost containment officer, your firm will not achieve the best possible results when it comes to cost containment and expense reduction and will likely be leaving money on the table.3 Expense Reduction Tips for 4th QuarterPublished by
Miles Lee on 9/3/2012
3 Expense Reduction Tips for 4th Quarter
Expense reduction ends up being one of the goals during the last quarter of the year, which is already the busiest quarter for many organizations. A company may be planning for the upcoming year, examining the budget, trying to determine sales goals, and more – all while staying on top of your company’s current needs. Forming an alliance with a cost containment firm now can help organizations contain costs in the 4th quarter and beyond.
1. Consider the importance of expense reduction in August and September. Retaining a chief cost containment officer’s services is something that companies need to do NOW, and not tomorrow. Let’s say an expense reduction specialist can save a company $20,000 per month. If that company waits six months to hire a cost containment officer, they’re paying $120,000 more than if they hire one today.
2. Renegotiate contracts with vendors in the 4th quarter, or even before the 4th quarter begins. Most vendors raise prices in the beginning of the calendar year. So if an expense reduction firm can renegotiate your vendor contracts in the 4th quarter while prices are lower, then those rates are being reduced based on the current value of those contracts. If you reduce prices before next year, you can skip the cost increase and start the new year with lower prices guaranteed
3. Continuously measure the effectiveness of cost savings. Just because new prices have been negotiated, don’t assume they will be implemented. Fairly frequently, negotiated rates are not implemented or the vendor finds additional expenses like a fuel surcharge, packaging charge, delivery charge, and more. Auditing savings on a regular basis ensures that those savings reach the bottom line. For more information on Auditing savings please download our white paper - Mind The Gap
Organizations typically also look at the next year’s budgets during the 4th quarter. If the budget needs to be reduced, it often means heavy cuts. But if they do expense reduction, they’re not cutting a budget, they're saving money. This is where an expense reduction firm can help organizations achieve the savings needed and in so doing increase profits.
5 Reasons a Chief Cost Containment Officer May Be NecessaryPublished by
Miles Lee on 8/27/2012
5 Reasons a Chief Cost Containment Officer May Be Necessary
Can a chief cost containment officer make a big difference to a company's bottom line? Cost containment may sound simple — just slash a few budgets, eliminate a few positions — but it is so much more complex than that. Here are five reasons a chief cost containment officer may be necessary to your company.
1. Increasing sales is less efficient than cutting costs. That may seem obvious, but it isn’t as simple as it sounds. Put simply, the work required just to make the necessary sales is more difficult, riskier and less efficient than simply containing the costs your firm is incurring.
2. Cost containment is about managing costs not slashing budgets. A chief cost containment officer will focus on reducing indirect overhead costs, instead of just cutting costs like a typical finance department might recommend. They can leverage their buying power to negotiate better wireless rates, equipment leasing, travel rates, and anything else that most companies don't even realize are negotiable. The savings your chief cost containment officer find can often save jobs while helping the company increase productivity and profitability.
3. There is no upfront investment. Trying to improve profits by increasing sales means adding more sales staff, and possibly a sales manager. But a chief cost containment officer can be outsourced and paid based on the savings they find for your company. That means no upfront expenses, office overhead, travel budgets, or the time and costs spent bringing the sales staff up to speed. The company shoulders no risk if the chief cost containment officer is paid on a contingency basis.
4. Your competition may already have one. Let's face it, every company is doing what they can to bring down costs, and they may be exploring any and every option to increase profits and outlast their competition - that means you. So if they can lower prices because they have already increased profits then they can win some of your customers.
5. Your company needs to be as profitable as it can be. You need to buy smart, and execute those savings to become as profitable as possible. One of the most effective ways is to increase your buying power. Very large multi-billion dollar companies may already have the buying power to get very low rates but small - to mid-size firms don’t have the same buying power and or expertise. Having a C3O can give you that expertise and power.
Differences Between Cost Containment and Cost CuttingPublished by
Miles Lee on 8/20/2012
Differences Between Cost Containment and Cost Cutting
The strategy and the Cost containment is essentially reducing the overhead costs of a business, but doing it strategically, without any blood-letting that typically happens when companies try cost cutting instead. Extra care is the important difference between the two.
Cost cutting, for many organizations that want to reduce overhead costs, may mean eliminating some of the services and expenses that organization has. It may be laying off staff, taking away some benefits, or cutting supplies and overhead, which means not allowing departments to purchase supplies they need just to function. Cost cutting has some short-lived benefits, but is often detrimental to companies and the way they operate in the longer term.
Cost containment is an ongoing process of reducing those overhead expenses, without eliminating necessary services. That's done by negotiating new rates with vendors and new vendors, and monitoring and maintaining promised discounts and lower prices.
Let's say a company orders 5,000 reams of paper every year in order to manage all of their paperwork. Cost cutting will slash the budget so that only 4,000 reams of paper can be purchased, and the company will have to find a way to do their jobs without that paper.
With cost containment, the company will renegotiate with the supplier so they are paying significantly less for those 5,000 reams. If the company can find a way to lower the paper price by 20%, they can continue to buy the same 5,000 reams of paper, but for less money.
Cost containment can still include some cutting methods, especially if there have been some new efficiencies put into place that make it unnecessary to purchase the services and expenses they had been buying, but can still lead to the same or better results.
So, if our paper-buying company created an electronic document system that only required 1,000 reams of paper to function, that would result in a much bigger savings that can be realized year over year. It would not only pay for the document system, but the 80% savings can then be used somewhere else, or go the bottom line in added profits.
Cost containment is an ongoing effort that is continually monitored and evaluated, while cost cutting tends to be a one-time exercise that may need to be done more than once, since the original problems — increased prices, growing expenses, lower profit margins — were never really addressed.