GOOD COMMUNICATION means GOOD BUSINESS

In reality, there are three distinct cost "improvement" strategies.....cost containment, cost

avoidance and cost reduction.

Cost Containment is a detailed plan and process of maintaining organizational cost and

purchased prices within certain specified target limits over a period of time. Cutting

expenses in ways that decrease quality or reduce marketing efforts to bring in new business

can lead to a company's demise and are not examples of a cost-containment strategy.

Cost Avoidance is an effort to prevent or reduce supplier price increases and ancillary

charges through the use of value analysis, negotiations, and a variety of other techniques.

Cost Reduction is an effort to reduce the costs incurred by an organization which has tangible results.

While most organizations embrace some sort of cost containment plan, they are not focused on avoidance and reduction until their business experiences an adverse event (e.g. losing a large customer, downturn in the economy or pricing pressure). We believe that all three strategies need to be developed and maintained at all times....whether good or bad.

Within each of these strategies, there exists two areas.....Goods/Services and People/Process.

Leveraging both our operational and financial background and experience, we can help develop these strategies and identify both the "low hanging fruit" as well as certain unique areas of opportunity.

Cost containment is the business practice of maintaining expense levels to prevent unnecessary spending or thoughtfully reducing expenses to improve profitability without long-term damage to the company.

cost

containment