If you do not have a clear definition of you costs and their associated impact to your organization, your cost cutting initiatives may end up costing more.

Here are some cost saving guidelines:

• Don’t squeeze the margin of your vendors. Even though this is a buyers market. You would not want your vendors to go out of business. However, you need to do your due diligence to avoid being overcharged. Take this economic downturn to establish better relationships with your vendors. Lasting allies are usually made during the toughest time.
• Don’t get too fixated on cost when you are managing a project. Consider the impact of quality and operational maintenance of the end product/services. Your immediate savings may lead to cost overrun in the near future.
• Have a holistic approach in cost saving initiatives. Instead of zooming in on a particular line cost, why not seek the next aggregated cost level and save from there? It is definitely more justifiable to initiate a project at this level. 10% savings of $100 vs 10% savings of $1,000,000. Which will contribute more to the bottom line? And which will motivate staff to contribute more?
• Spend to save. Now is the time for company to spend on projects and training. Have your project portfolio ready and filter out projects that can generate the greatest cost savings impact. Invest in training, process improvement and technology refresh. A classic example is for company to save on hardware maintenance cost and ended up paying more for each service call.