I’m really pleased to be talking to you today about cost reduction and its relevance to our tax burden and the potential it holds for Pelham and for business. I hope to address the new realities that are challenging our adaptive capabilities and focus on the competencies needed to manage part of the affordability crisis.
The visual office
Inventories are there to compensate for weaknesses in process and are waste in a flimsy disguise. Do not be fooled by justifications that suggest otherwise. Reduce the storage space and you will buy less stuff and fix your processes. Make inventories visible by eliminating closets, cabinets, and shelving. Everything should be stored in locked ‘cages’ so that inventories are always visible to everyone.
Drop the prosperity narrative
The current narrative of prosperity does not encourage frugality. The cost of tax increases does not fall equally on everyone. They will fall first on the same people who always feel the bite. Many in fixed financial circumstances have no conceivable way of paying excessive taxes as well as meeting their other affordability issues and an increasingly uncertain future.
Exploit our full capacity
We have built it, now use it. Taxpayers have already made significant investments to get where we are today. Every Pelham service process, with a few minor exceptions, has the people and tools to get a job done and still do more. With proper capacity-building, which comes from focused leadership, planning, and training, there should be no need to add more people for some time.
The new strategic planner
Being and doing should be treated as everyday, integrated staff activities. Make the shift from doing, to collecting data, to reviewing data, to becoming researchers to becoming decision makers. Process is the creative force of the Town. Experience, practice, insight, and intuition will all aid in honing these skills.
I am planning a future article on the topic of consultants.
Stay ‘close’ to your suppliers
Suppliers are well known for making the most lucrative money-saving suggestions. They have the best product knowledge, and they can access things like new materials, new methods, and better commercial terms. In times like this prices will be changing rapidly. Good suppliers will be searching out tariff-resistant products and offering them to their best customers. Make suppliers compete and, once successful, make your suppliers a trusted, supply chain partner. If a supplier can come through in a tariff plagued environment, they have earned the right to the business.
Restrict the catalogues – I don’t need paper clips. I’m just bored
Restrict the number of people who can spend money, and you will spend less. Let me tell you a related personal story.
I have learned that every distressed company has similar problems to the next. They are always in financial distress due to a failure of leadership. As part of my ‘eccentric act’ when I entered a new business, I would take on the role of ‘cost slasher’. The easiest pickings and hardest hitting were always office supplies.
Everybody usually had an office supplies catalogue and the authority to order office supplies. As one of my first acts, I collected all the catalogues and kept one in my office. If someone ‘needed’ something, they had to ask me for the catalogue, which, of course, prompted questions and the need for a proper justification. This simple change in process informed frugality thinking across the workforce.
Applying an affordability lens cannot be just an isolated act of goodwill nor an act of a single department or person. Our affordability plan needs to be made evident in everything that we say and do. Cost reduction must always be part of the Pelham’s DNA.