Building on its work with leading management consultants and some of the world’s best-managed companies, Oracle has identified five high-impact strategies that companies can pursue to strengthen their competitive position today and get ready for the recovery.
1. Conserve cash. Cash provides the flexibility that companies need now to make acquisitions, expand into new geographies, invest in new products, and hire new employees. Oracle recommends that companies conserve cash by eliminating excess inventory, optimizing collection efforts, and improving cash forecasting processes. Optimizing collection efforts using best practices and advanced collection tools can improve days sales outstanding by 3 to 5 days, lower costs by 35 to 45 percent, and greatly reduce credit turnaround times.
2. Drive down cost of goods sold. Rather than cut general and administrative expenses across the board, Oracle recommends that companies look to achieve long-term cost savings by improving supply chain efficiencies and reducing operational complexity. High-impact strategies include minimizing product costs and risks, reducing spending on goods and services, and lowering logistics costs. New solutions such as Oracle Sourcing can help companies reduce sourcing cycle times and administrative costs by more than 50 percent and speed the launch and delivery of new products.
3. Maximize customer value. During good times, 20 percent of the average company’s customers drive most of the company’s profits, but in a downturn this ratio falls to 5 percent. That’s why building loyalty with the best customers is essential to retaining and expanding market share. Other strategies to maximize customer value include adopting customer self-service and improving sales force effectiveness. Customer self-service solutions let customers resolve their own issues on their own timeline. These solutions are 14 times less expensive than phone interactions and 35 times less expensive than in-person interactions.
4. Manage risk and performance. Mitigating risks from the credit crunch and managing new compliance and regulatory requirements are top business issues right now. Oracle recommends that companies adopt a consolidated approach to compliance and a flexible approach to planning to better manage risk and performance. Oracle’s governance, risk, and compliance (GRC) solutions, for example, help companies reduce GRC costs and meet requirements, safeguard their brand reputation, and proactively manage risks and opportunities.
5. Optimize workforce performance. During downturns, an engaged and productive workforce is especially important. Oracle recommends that companies achieve this goal by automating HR service delivery, taking an active approach to talent management, and using learning and performance systems to engage and develop their workforce. Companies using solutions such as Oracle’s PeopleSoft Enterprise Learning Management can reduce employee turnover by 10 percent and reduce training travel and instructor costs by as much as 30 percent.