Zero-based budgeting on direct spend
Mid-market manufacturer / distributor · Regional · Multi-month engagement
How a fragmented, incrementally-managed cost base became a set of owned, defensible budgets — with a material share taken out of addressable direct spend in the first cycle.
Context
The client budgeted the way most organisations do: last year's number, adjusted by a few percent. Direct categories — workwear and laundering, packaging, MRO — had grown quietly for years. Spend was visible in total but invisible in detail: no one owned the individual lines, and no one could say what any of them should cost.
The brief wasn't "cut costs." It was to understand the cost base well enough that the savings would be defensible — and would hold.
Approach
I didn't start with a target. I started with visibility.
- Built a granular spend baseline — every line broken down by supplier, item and driver, not just category totals.
- Mapped each cost to its operational driver, so every number had a lever attached. The question shifted from "what was paid?" to "what makes this cost what it is?"
- Built should-cost models from the ground up — what each category ought to cost, against what was actually paid. The gap became the opportunity.
- Assigned each category a named owner, with the spend defended from zero at every cycle rather than rolled forward.
No boilerplate deck. The output was a working model the client's own team could run after I left.
Result
- Double-digit reduction on the addressable direct spend base in the first cycle.
- Savings held into the following year, because ownership and the annual reset were built into the process — not bolted on afterwards.
- The largest single saving came from a driver, not a price — removing an unneeded laundering frequency, not renegotiating unit cost — which is where zero-based work usually pays off: the cost no one thought to question.
Want to know what the same lens would find in your cost base?
Book a 30-minute call