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Matt Lewis: The multi-million-pound olive

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KPMG’s head of national markets for London on what businesses can learn from in-flight meals

I bet you didn’t even notice how many olives were on your in-flight meal on the way back from your holidays. Perhaps the canny among you did, the auditors among you definitely would have.

You know the one about the airline that was looking to cut costs? It was advised it to remove one olive from each of its meals, just the one.

That one olive, multiplied by the couple of hundred meals per flight, multiplied by the tens of thousands of flights the airline made each year, over several years, added up to a few million pounds saved in fuel costs – thanks to the reduced weight of all those excluded olives.

I always remember the olive story on the way back from my holidays. It exemplifies the type of micro changes that can make gargantuan differences to bottom lines.

Businesses are always looking to make cost savings. Yet many fail to recognise what actually matters to their customers.

Many CEOs overlook one of the most important aspects of their company: the customer services team. Complaints are one of the most useful tools of business strategy. Find out what your customers don’t like or don’t care about, and you learn what matters. And what doesn’t.

And the things that don’t matter – that second layer of bubble wrap, that freephone number, that one extra olive – those things can all go if you’re looking to make savings.

“My friend asked him if he really needed that specific shade of green? Had he realised that using this almost imperceptibly lighter shade of green #6759 could save him 0.02p per crayon?”

My friend was telling me the other day about his friend who is CEO of a company that sells coloured crayons, among other products. This CEO told my friend he had set up lucrative supply chains, kept the crayon packaging to the bare minimum, and protected his decent profit margins.

The CEO needed to make cost savings he told my friend – but there was nowhere else to cut from.

Really? My friend asked him about the pigment used for the dark green crayon. “The dark green crayon?” he responded. “No offence, but I hardly see how that’s relevant.”

My friend asked him if he really needed that specific shade of green? Had he realised that using this almost imperceptibly lighter shade of green #6759 could save him 0.02p per crayon?

“Aha – no,” the CEO replied. But all those crayons with a 0.02p cost saving, multiplied by every box sold throughout the year, over several years… you get the picture.

And what about all the pigments of the other crayons? Then what about the pigments used on the packaging? And the token hologram in the corner of the label?

You see, parents and children just want brightly coloured crayons. They won’t notice these micro changes that can, in the long term, save my friend of a friend millions.

Let’s protect the people we do business with, and cut costs by losing the olive.

Matt Lewis is head of national markets for London at KPMG.




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