How far to cut in the face of a recession, was a subject that cropped up in a number of presentations – and private conversations. Matthew Davis of American Express Corporate Services listed some major – but odd – cost-savings firms have made:
– Morgan Stanley saved $38,000 by scrapping birthday cakes for its New York-based investment bankers;
– Goldman Sachs saved $2.4m a year by getting rid of free bowls of fruit;
– American Airlines saved $100,000 by removing a single olive from each salad served in first class;
– Edison International persuaded its cleaning staff to work in the dark, wearing miners’ lamps to save electricity.
Davis said that businesses could typically cut their travel and entertainment expenses by 45% – with half of those savings coming just by negotiating better rates with airlines and hotels.
Matt Key from Barclays B2B, a joint venture between Barclays and Accenture specialising in occurring e-procurement services, said that client businesses had saved 18% on procurement costs by using reverse auctions to buy such things as stationery, janitorial services, PC consumables and office equipment. (see IT Decisions)
Also at the summit, Kim Warren of the London Business School argued that businesses shouldn’t just look at things like the change in the number of customers, they should try to determine the rate at which they are both acquiring new customers and losing existing ones. By studying the dynamics of the flows of customers and other resources, it’s possible to get a better understanding of where the business is heading. Warren made a compelling argument that, during the mid-1990s, M&S was reporting record profits with industry-beating margins – but that in doing so it was imperilling its own business by under-investing on staff, resulting in customer dissatisfaction and, eventually, to the crisis which the retailer found itself in a few years later.