November 29, 2007 08:00 ET

MGPS: Managing Costs in a Tough Climate

TORONTO, ONTARIO--(Marketwire - Nov. 29, 2007) - There has been some positive news lately with the Canadian dollar dropping to parity with the US dollar. The dollar fell briefly below parity on Tuesday before closing slightly above the US dollar. This is welcome news to many businesses on both sides of the border. The US dollar has been steadily appreciating since early November, when it hit a 33 year record low of CAD $.90570 on November 8.

Nevertheless, the positive news is relative. A dollar at parity is still tough for Canadian exporters as well as US manufacturers. This has been a difficult year for many. Based upon the recovery of the dollar this month, it appears that the US dollar will continue to appreciate. However, predicting the future is a difficult task and far from certain. While many businesses would welcome a stronger US dollar, it would be prudent to look for ways to effectively manage costs in case the US dollar falls again.

It is easy to mistake healthy margins during good times to sound management, but effective management is truly measured by how well a company negotiates a difficult situation. As we approach the end of the calendar year (year end for many organizations), it is important to look back to see what was done well and what was overlooked. Learning from our experiences and applying this knowledge is essential to ensuring a financially healthier year in 2008.

Management should be asking (and attempting to answer) certain cost-related questions such as: Have we effectively used our economies of scale? Can we consolidate suppliers? Are we paying competitive rates? Are we catching reporting and duplication errors? Are we making use of effective planning? Are our discounts 'real'? Can we work with our suppliers to reduce their expenses? Are we able to accurately measure costs?

These are a few of the questions that, if properly answered, will enable an organization to improve existing margins and weather the year ahead. Don't count on the dollar. Count on effective cost management strategies.

About MGPS

MGPS is a management consulting firm that specializes in reducing non-core expenses. These expenses tend to be indirect, hidden and scattered throughout the organization. MGPS identifies hidden costs and develops and implement efficient processes to drive out unnecessary expenses. The end result is increased cash flow and greater profitability.

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