Data driven cost management

In an environment of maximum uncertainty and pressure on results, combined with tighter margins, the emergence of new channels and the increased use of new technologies, more price-sensitive and better-informed customers, and the appearance of new disruptive competitors, among other reasons, there is a growing interest in the industry for evolving cost management and obtaining metrics that show the true profitability of their business activities.

"Data Driven" Cost Management

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New technologies, increased processing capacity and the availability of information are leading to a new generation of cost models:

  • "Data Driven" cost model: focused on detecting efficiency opportunities through the use of new technologies and data analysis, such as by using Machine Learning models.
  • Technology cost model: focused on pinpointing the origin of technology costs in greater detail, improving the ability to manage these costs and translating them into concepts that can be understood by the business.
  • Transactional cost model: focused on calculating the cost of customers (and by aggregation products, businesses, channels, etc.) based on the transactions they perform, recognizing the reality of digital transformation and its impact on efficient cost management.

Besides continuing to develop traditional cost models, Management Solutions works with different companies to define and implement cost models using disruptive approaches such as "Data Driven" cost management, based on broadening the analytical capabilities of the management control and procurement areas to better identify savings opportunities, by creating databases combining various sources and using a series of advanced analysis techniques that enhance the information and detect specific areas of action not evident at first.

The modeling database uses data from purchase orders, contracts, accounting, as well as additional sources such as supplier registration data, facilities and technology service and expenditure categorizations. With this structured database, models are developed using techniques such as NLP (Natural Language Processing) for cost categorization, and analytical techniques focusing on trend analysis, outliers, internal benchmarking and identification of cost categories diverging from the business strategy are applied.

These types of models make it possible to achieve excellent results during the first six months after implementation.