Many businesses are under pressure as we move into a more inflationary cycle.
The global inflation rate has increased significantly in the past years due to various factors, such as the pandemic, oil price hikes, and bottlenecks in supply chains. Businesses are grappling with the effects of inflation to remain competitive while managing rising costs and labor shortages. These challenges put a halt to business growth plans and digital transformation initiatives.
If your business is being affected by inflation, here are some strategies you can implement to mitigate its impact on your operations and profitability.
Monitor and Control Expenditures
Monitoring the overall financial health of the business is critical in keeping the business profitable and competitive in this time of economic distress. Many companies are opting to launch cost-cutting measures to reduce expenses and keep operations afloat. This can be in the form of reducing supply expenses, maximizing employee skills, and reviewing production costs. Controlling where the money goes and who spends it, reinforcing accountability, and being aligned on cost-saving goals will greatly help businesses overcome the challenges of inflation.
It is best practice to have processes and systems in place to monitor spending across all aspects of the business, cost category, and functions. Major expense categories to be monitored closely include wages and benefits, rent, utilities, infrastructure, professional fees, marketing, and advertising.
Diversifying Your Supply Chains
According to the news agency Bloomberg, “The global supply chain is a mess.” After two years of the COVID-19 pandemic, businesses worldwide are feeling the strain as global product shortages and rising shipping rates reach historic levels.
With inflation on the rise, businesses must take steps to invest in supply chain resiliency and sustainability. Some options for businesses include identifying domestic alternatives, diversifying vendors, and stockpiling items that are highly sensitive to the fluctuation of prices. It can be a difficult balancing act, but it is necessary to substantially reduce pressure from inflation.
Know What Cuts to Make
Some executives might rush to cut down on spending across the board, but businesses that often emerge stronger from periods of economic distress are not the ones that focus on areas impacting profitability but those that take a tactical approach such as procurement cost savings.
Addressing operational inefficiencies and cutting non-core function initiatives such as renegotiating outdated contracts, eliminating free shipping, and discount reductions or removal can lead to more savings. You can also explore:
- Bundling Contracts where you secure standardized terms in a single supplier throughout the company
- Bundling Volume where you can consolidate spending and volume in a certain period of time and proceed with discounts
- Optimizing Specifications or standardization and changing/ having alternative materials
Smart Resourcing Strategies
Companies have reaped the benefits of offshoring, with quality offshoring providers who are able to build teams and implement strategies that can increase and improve operational efficiencies, customer experience, and deliver scalable workforces.
Tapping into talented pools from other countries such as the Philippines, where labor and occupancy expenses are about 70% lower than in other countries, has shown significant cost savings. Your in-house team can focus on more essential business categories and strategies. . Key functions that you can easily outsource include Payroll, Back Office or Admin, IT, and Tech Support, Marketing Team, and Customer Service.
Satellite Office is your expert offshoring partner
Satellite Office has a proven track record of assisting businesses to leverage the benefits of outsourcing by building a dedicated, highly skilled, and cost-efficient offshore team in the Philippines.
Our tailored offshore outsourcing solutions give businesses full control of their remote team’s productivity, output quality, and targets, while we provide comprehensive support that makes managing offshore employees as simple as possible. Experience a full-service model, including premium facilities, HR, IT infrastructure, account management, and payroll support services, with no hidden fees.
Looking for an offshore support service partner? Get a free assessment now, and let’s see how we can help.