A huge opportunity to reduce printing and stationary costs exists across banks by looking at securitised, not securitised, promotional and corporate printing requirements holistically. Business group level budgeting based on historical volume and spend data and close monitoring through a transparent centralised procurement process, results in not just cost optimisation through enhanced negotiation power with suppliers but also in ensuring enhanced service delivery by monitoring and measuring SLA-based delivery turnaround times and quality of deliverables.

An observation of retail branches reveals that there are volume optimisation opportunities based on number of customers, footfalls, growth targets, etc., for various standardised forms, stationary and promotional material.

Processes need to support identification of these volume optimisation opportunities to control waste and curb the tendency to over-procure. Numerous other small practical opportunities also exist for reducing incremental costs of printing, for example a business group designing a lead generation form, that spreads to multiple pages of non-mandatory fields.

A quick dipstick analysis of the filled forms, though in most cases reveals that the DSA, in an attempt to get the said form filled quickly, asks the customer to sign at couple of places and leave the rest to him! The print cost of the form per unit could probably have been reduced by half just by rationalising the content.

In a cost management exercise, this is what separates spend from waste.

Repair and maintenance

Most of the traditional banks follow a decentralised model in which repairs are done at local level with the approval of branch managers, but teams exist at regional level for rate negotiation and high-ticket approvals. The debate is still on whether it makes senses to negotiate repair rates at the central level or the let the branches execute them at local level.

This debate gets complicated as lack of tight processes and controls also leaves scope for collusion. The solution possibly lies somewhere in the middle. Fix rates, through reverse auction, at central level for expensive repair items like desktops but, on the other hand, give the flexibility at the local level for maintaining routine items. Smart rent negotiators park some of the maintenance responsibilities with the property owners at the time of signing lease.

Travel and Hospitality

Travel is one of the most visible means of communicating an organisation’s cost-sensitive approach, however it is required that any cost-cutting initiative is rationally structured and has a multi-pronged approach on reducing costs.

The first step is ensuring that there is a halt on maverick spending by business groups and putting in place a travel optimisation process. The initiative typically involves setting up a lean centralised travel organisation supported by processes inbuilt with cost sensitive control structures.

Ensuring utilisation of lowest cost travel option, integrating approval structures across business groups, ensuring optimum lead time in bookings and revisiting the criticality parameters for physical travel, are some of the key areas to be looked upon.

Banks need to put in place robust data-tracking processes and ensure involvement of key stakeholders in defining policy parameters for employee travel, to make sure that policy even though aimed at cost reduction remains rational and does not hinder business operations.

Another key area is entering into volume-based discounting contracts with airlines, the first step for which is to identify the key sectors, business groups and historical volume data to arrive at projections for sectoral volumes, identify key carriers based on connectivity on said sectors and then engaging with carriers for rate contracts.

Ensuring granularity in approval processes, based on detailed reasons for travel and putting in place control structures to restrict non-critical business travel. Banks need to look at these factors closely to identify opportunities for remote meeting infrastructures and develop a business case detailing the return on investment and volume-based sizing of infrastructure at various locations.

Also, the incidental costs and total cost of trip (including stay, local travel, etc) need to be accounted for to arrive at actual total cost of travel, even though typically most banks tend to look at these costs in isolation. A holistic approach will provide critical inputs for re-evaluating the actual utilisation levels and comparative costs for stay that banks incur on hotels, service apartments and guest houses.

Security

Post recent happenings, security has emerged as a business critical function. But opportunities for cost reduction exist if one wants to look for them. Today, when banks tend to outsource the ground level security to private security agencies and mid and senior level positions to ex-army men, it becomes vital to balance the two. Cost-effective audit procedures for private security and a balance between in-sourced and outsourced resources is critical to cost and efficiency.

Levying penalties on security agencies for failing to adhere to SLAS, by random audit, can save money in the short term and tighten security in the medium term. In the long term, it is crucial to note that the future belongs to electronic and not physical security.

Overhead cost control programmes are most often born in economic downturns and recede in boom phases. Till we encounter the latter, it is best to save every penny without being pound foolish.