Sustainable Cost Reduction Primer

SCORE: Sustainable Cost Reduction | February 2016 | © 2012-2016 Proprietary and Confidential shared.value.chainPage 1

Delivering triple bottom line savings

SUSTAINABLE COST REDUCTION


Subject Situation Target Group Value Success factors

What is it about? Why is it of interest? Who is interested in it? What is the benefit? How does it work?

• Sustainable Cost Reduction goes beyond traditional cost reduction-it is focused on reducing costs through sustainable practices

• Companies are often using cost reduction with a focus on short-term gains and therefore miss out on long-term possibilities for cost reduction

• Cost reduction is one of the most important ongoing issues in businesses and ensures continuous profitability

• At the same time, sustainability has proven to enhance a company’s profits and preparing it for future possibilities

• The public and companies’ stakeholders increasingly demand sustainability to be taken into account.

• Our approach is interesting for all companies who want to reduce costs

• It is designed for a cross-functional team of purchasing, production, sales, supply chain, logistics etc. who will jointly work on reductions

• As a result top- and middle managers can rest assured that cost reductions are achievable

Sustainable Cost Reduction helps you to..• ...determine all

opportunities for your cost reduction and what you can do to implement them

• ...gain a perspective of levers for cost reduction and how to use them

• ... invest in the right activities which ensure short- and long-term cost reduction without jeopardizing growth

• Proven project structure with ~10 product-specific workshops to identify levers throughout the entire product portfolio

• Development of ideas for cost reduction and translation into concrete project ideas with responsibilities

• Proven and hands-on implementation philosophy with a project management office

Exemplary project approach Illustration of deliverables and benefits Your chance

Next steps

• Take advantage of our expertise and methods

• Secure a competitive advantage through a structured process

• Contact us today: [email protected]

• +49 89 461 331 686

Sustainable Cost Reduction can help to deliver trip lebottom line benefits


We use our proven sustainable cost reduction method ology (SCORE) to deliver results

Market induced change

1

Top Management

Cross-functional teams

Opportunity Workshop

2Cost

Reduction PMO

3

• Identify market need / competitor action

• Identify product groups that have to improve its cost position

Business Units and Functions

• Cross-functional workshops to identify and develop cost reduction opportunities

• Detail high potential opportunities in measure sheets

• Agree on an action plan

• Implementation of agreed and consigned measures

• Resource allocation and prioritization

Benefits of using SCORE for companies• A proven method to identify,

develop and implement additional cost reductions

• High rate of implemented measures due to commitment of cross-functional teams

• New perspectives and levers to reduce cost along the product lifecycle and along the value chain

• The approach creates an internal community of engaged cross-functional teams

• A project management office supports follow-up, measurement and implementation support

• Measurement of progress and results according to standard metrics and best practices

The ROI of our SCORE

between 1:10 and 1:100

The ROI of our SCORE method is typically

between 1:10 and 1:100

• Track follow-up• Support teams during

implementation• Resolve conflicts of

interest between management and business units

SCORE = Sustainable Cost Reduction Methodology

• Reconciliation with Controlling and savings measurement


Product Cost Optimization Workshops – Identify savin gs potential of 12-16% of COS

RESULTS• Savings potential as 12-

16% of COS identified• Several hundred ideas

were identified and around 15% of these formulated in detail

1

2

3

4 Client Situation

Challenge

Approach and Solution

“Take Aways”

• Client is a € 700 Mio. German Electronics company, delivering products, solutions and services in the industrial environment of power, signal and data.

• Though still in a beneficial economic situation, the company has set itself the goal of increasing its growth profit margin (GPM) to 50%.

• In order to reach its Gross Marging targets, the company had to drastically reduce its cost of sales

• At the same time, the client aimed to raise its turnover by 40% over the next 5 years.

• The company had already undertaken certain measures to reduce costs, mainly within its production set up (lean etc.), and wanted to identify further savings

• The objective was to identify significant savings potential to be realised in the next 1-2 years without jeopardizing growth.

• shared.value.chain supported the client in conducting workshops to generate ideas and measures to improve costs, esp. COS.

• The workshops were conducted within multi-functional teams (product development, quality, purchasing, SCM, controlling, product management) for different products/ product groups.

• Technical support and moderation enabled multi-functional teams to identify a broad range of new and unique saving ideas.

• Start early to optimize your cost saving approach – don’t wait until the market forces you to do it!

• Introduce a project management office to manage/track the agreed savings and project approaches.

• Use the power of cross-functional teams and align constantly with project owners.

• Take a ‘we’ instead of an ‘I’ approach to unlock the potential within the company.

Case Study


Your Contact

Adams-Lehmann-Straße 56 80797 MünchenTel. +49 89 461 331 868Mobil +49 170 768 58 [email protected]

http://bit.ly/1G1vpcm

We help companies to achieve sustainably better performance

Diplom-KaufmannMichael D‘heurFounder & Managing Director

Springer Gabler; Deutsch; Published Oktober2013. More Information:http://bit.ly/1fTcrWg

Springer International; Englisch; Published April 2015.More Information: http://bit.ly/1fTcrWg

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