CXOs are responding to adverse economic conditions, including inflation, supply chain issues and an overall 11% decline in private market fundraising. According to PE-CXO’s recent survey, 75.7% of respondents have made more cost reductions in the past 12 months than they did in the previous year. In a challenging economic market, it’s all the more critical to maximize EBITDA through gross margin improvements.
Choosing where and how to prioritize cost reductions is key to mitigating the risk of adverse impacts on business operations. These choices are dependent on your business’s unique needs. As you develop your strategy for maximizing EBITDA through cost reductions, understand common areas executives consider when planning margin improvements.
Reduce Overhead Expenses Through Process Optimization
68.5% of CXOs most frequently prioritize redundancies in systems, equipment, or other resources used as they approach cost reductions, which helps to decrease this spend.
— PE-CXO Survey
Overhead costs include any expenses that are not directly tied to the production of goods or services — rent, utilities, office supplies, etc.
Inventory management optimization is a key way to reduce costs. Implementing inventory tracking systems and prioritizing best-selling products helps identify areas of wasteful storage costs and SKUs to eliminate.
As such, survey respondents have indicated that they consider the following when looking at inventory optimi...