Management association assesses operational costs

CEBU, Philippines – To survive the financial crisis and be more competitive in preparation for the much anticipated upswing in the economy, member companies of the Management Association of the Philippines (MAP) are finding ways how to lower their operational costs.

Recently, MAP’s Trade, Industry and ICT Committee did a survey to find out what’s eating up the budget of most companies in doing business.

In a statement, MAP’s Cost of Doing Business (CODB) Project committee governor-in-charge Mark Watkinson bared that although the survey is still ongoing, he said that the Committee considers it necessary to release the partial results in order to proactively align their programs and MAP as a whole that will benefit the Philippine business community.

The survey covered various industries from manufacturing to services and respondents came from multinational companies, large, medium and small enterprises from a broad range such as car manufacturing, ICT, financial institutions, to service providers like logistics and BPO companies, among others.

Watkinson said that the questionnaire included the following, details about respondent’s main line of business, total number of employees, total assets, cost-saving measures being implemented or is being planed to implement and which costs of doing business they want to be reduced significantly.

The respondents’ top three cost-saving measures included improving productivity such as the use of automation and ICT which garnered 61 percent.

Another is business process re-engineering such as redesigning organizational processes which got 33 percent response.

Meanwhile, outsourcing or out-tasking got a 21 percent share which the committee found surprising because retrenchment and offshore expansion or moving operations out of the Philippines were the last viable options being considered by the companies.  

The survey also noted that many respondents which covered 39 percent considered electricity as the common cost they want reduced significantly in their operation expenses, but the number one ranked item was taxes.

Meanwhile, other immediate areas where the respondents would like to cut cost are travel which got 43 percent share; logistics such as inventory handling got a 36 percent share, while fuel costs, facilities such as storage and rental as well as marketing or advertising got 33 percent shares.

MAP ICT Committee said that the preliminary survey results also gave some insights on the types of information most businesses would need during these challenging times.

These included getting accurate and updated industry or economic data to benchmark their companies’ performance and expenses as well as benchmarking best practices of productivity rates of various businesses.

Most also want access to better or more reliable and realistic information either from government or research institutions on infrastructure projects, and the economy in order to help predict or manage exchange rate trends, OFW remittances, among others.

Among the strategies of the Committee to pursue the objectives of the CODB Project include encouraging MAP members not to contribute to the unemployment rate but focus instead on reducing non-people-related costs of doing business.

They also want to generate the support from appropriate government agencies and other business organizations that could be instrumental in bringing down business expenses and conduct fora or sessions on topics like good governance measures, risk management techniques, and ICT-enabled processes that will help reduce the more common costs specified by MAP members in the survey as well as promote competitiveness and optimism amidst the global financial crisis by disseminating accurate and reliable information that will enable businessmen to make better decisions. —Rhia de Pablo