Business collaboration for cost savings

Published January 2013

Companies are increasingly willing to discuss mutually beneficial collaborations with other firms, to deliver cost savings, according to 4C Associates.

In the consultancy’s 10 predictions for 2013, research showed more businesses, particularly in the logistics sector, are embarking on a joint strategy – including using shared vehicles, reducing labour costs, lowering carbon emissions and sharing technology - to make savings. Tina Greer, managing partner at 4C said: "Cross-sector projects and collaborations will enable companies to access the next level of savings." Further, businesses that adopt a cost leadership approach are most likely to succeed given the slow economic growth forecast for the year ahead, as companies including Amazon, BT and Whitbread have shown through innovative cost management. Ed Ainsworth, 4C Associates’ managing director, said: “The past 12 months have proved trying for many companies and with limited growth forecast for 2013, cost transformation looks set to continue to play an important role. “New challenges and ever changing consumer behaviour will inevitably lead to new business opportunities and we are confident that through innovation and cost management, the very best companies will be able to thrive.” 4C also predicted higher salaries in Asia and a global surge in fuel prices during 2013 will force companies that have moved functions offshore to reconsider their options. Many western nations have already begun implementing measures to gain more value from onshore operations. An example of this is the Patent Box, a tax reduction scheme for innovation that companies can apply for when it comes into force in the UK in April 2013. Low inflation in 2012 means that many businesses have been keeping their prices low for a long period of time, but they are now coming under increasing cost pressure and will be forced to raise prices this year. Suppliers will have to tread carefully against strong resistance, while 4C recommended buyers focus on implementing robust processes to mitigate potential price increases. Further predictions include a change in free online delivery models as rising demand and fuel prices will mean retailers make deliveries at a loss. As a result retailers will need to explore new strategies such as Amazon’s collection lockers and Tesco’s ‘click & collect’ scheme. Anna Reynolds,