Consulting & AdvisoryFree
Cost Reduction Diagnostic by Effort Required
Send your spend data and get every saving marked as a signature or a project, with its cost to achieve and the date its window shuts.
River reads the general ledger against the contracts and the headcount file, and every saving comes back carrying three things a savings list normally leaves off. What has to happen for it to be real, meaning one signature or a funded project. What it costs to get, kept separate from what it saves. And the last date it can be acted on this year. The sheet then sorts on the first of those, because a list that mixes signatures and programmes is a list nobody acts on.
Search the query and page one is cost reduction frameworks. Spend cubes, category trees, a savings percentage per category, a maturity curve. What they produce is one column of numbers headed opportunity. The client reads that column, picks the biggest line, finds out in month two that it needs a system replacement and a lease exit, and writes the whole programme off as consulting arithmetic. The column that would have stopped that was never on the page.
Built for the consultant handed a data extract and two weeks, whose report has to survive a CFO working out what is genuinely actionable before Friday. It picks up where the operating diagnostic said to look, and the lines that survive become the plan inside a diagnostic pack that scores what it finds. Reach for it before a turnaround, ahead of a budget round, or any time a board has asked for a number by the end of the month.
The two fields a savings list never has
A saving is the difference between two states, and the cost of moving between them is a separate number most decks never print. Federal procurement has kept the list of what those costs are for decades. FAR 31.205-42 names them one by one: costs that cannot be discontinued immediately, loss of useful value on tooling no other work can use, rental under unexpired leases less their residual value, restorations the lease requires, and settlement expenses. Read it as a checklist and a cost to achieve stops being a guess.
The second missing field is what a line requires before anybody is allowed to act. A headcount saving is not a signature. 20 CFR 639.3 sets the mass layoff test at a single site of employment, at 33 percent of active employees and at least 50 of them. Section 639.5 then tells the employer to look ninety days forward and ninety days back at actions each too small to count on their own, which is what a cost programme quietly builds.
Halverson Distribution, a regional industrial distributor on $142m. The diagnostic found $4,755,000 across $27.6m of reviewed spend, which is the number a normal deck prints and stops at. Sorted, $1,029,000 needs four signatures and nothing else. $345,000 is real and locked behind renewal dates. $3,167,000 needs $2,974,000 spent to reach it, which is 94 percent of its own first year. And $214,000 carries a 92 month payback and belongs nowhere near the deck.
How it works
Send the extract
The ledger by account and vendor, plus whatever the contract folder and the headcount file hold.
Set the appetite
Whether this client can fund a project at all, because that decides which lines are worth working.
Read the buckets
Signable now, dated and locked, worth funding, and the ones to leave alone.
Argue a line
Ask what a cost to achieve is built from, or drop in the contract that finally arrived.
What you get
- Every line marked as a signature this quarter or a project with a budget behind it
- Cost to achieve on its own line, so the net figure and the payback are both visible
- The last date each saving can be acted on before it renews away for a year
- Headcount lines aggregated by site and by window rather than by company total
- The savings the sheet recommends against, with the arithmetic that killed them
- A comparator set to the client's own best site instead of a median nobody can check
Common questions
What makes a saving a decision rather than a project?
One named person can authorise it inside the quarter with no budget, no system change, no consultation and no capex. That is a decision. Everything else is a project, including anything needing a requalification, a lease exit or a headcount action. At Halverson four signatures covered $1,029,000 and cost nothing at all to get.
Why does the cost to achieve get its own column?
Because a saving net of nothing is not a saving. Halverson's three fundable projects were worth $3,167,000 a year and cost $2,974,000 to reach, which is 94 percent of the first year of them. They are still worth doing, and that is a completely different conversation from the one the gross number starts.
A saving is real but the contract just renewed. Does it drop off?
No, it gets a date. Two of Halverson's overlapping software agreements auto-renewed five weeks before the diagnostic started, which parked $198,000 until the following February. It stays on the sheet with the date against it, and the dates come out of the contracts read to the clause rather than off a spreadsheet. Where the whole software estate needs that treatment, the systems assessment dates every application.
Two of our lines each cut fewer than fifty jobs. Is that clear?
Not on its own, and this is the join worth making. Nine roles went at Halverson's Fresno site in November and forty-four more in December, forty-three days apart. Company-wide that delayering was fourteen people. At that one site it was fifty-three of a hundred and forty-eight, which is where the aggregation test starts to bite.
You recommend against some of your own findings?
Yes, and it is the most useful thing on the sheet. The ERP module swap at Halverson saves $214,000 a year and costs $1,640,000 to put in, a 92 month payback. Printing that as an opportunity and letting the client find the payback in month three is how a diagnostic loses its credit.
Where do the comparators come from?
From the client wherever possible. Halverson's freight comparator is their own best distribution centre at $1.96 a case, which nobody in the room can argue with. The gap to it was $972,600 and only $626,000 survived once lane length came out. Published figures are the fallback, and they need the comparability work.
Where does this sit in the engagement?
Week one, running alongside the operating work rather than after it. The buckets are what the closing meeting is actually about, and the dated lines set its deadlines. The revenue side runs in parallel in the belief register, because a cost case built on a wrong growth story gets reopened. Whatever survives goes into the findings and recommendations set with the cost to achieve attached.
Cost Reduction Diagnostic by Effort Required
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