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Sustainable Cost Reduction Primer


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You need to reduce cost in your organization significantly and in a sustainable manner?

Try our proven approach to reduce cost sustainably across the entire product lifecycle, the end to end value chain and including savings that consider planet and people as well.

Published in: Business
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Sustainable Cost Reduction Primer

  1. 1. SCORE: Sustainable Cost Reduction | February 2016 | © 2012-2016 Proprietary and Confidential shared.value.chainPage 1 Delivering triple bottom line savings SUSTAINABLE COST REDUCTION
  2. 2. SCORE: Sustainable Cost Reduction | February 2016 | © 2012-2016 Proprietary and Confidential shared.value.chainPage 2 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: • +49 89 461 331 686 Sustainable Cost Reduction can help to deliver triple bottom line benefits
  3. 3. SCORE: Sustainable Cost Reduction | February 2016 | © 2012-2016 Proprietary and Confidential shared.value.chainPage 3 We use our proven sustainable cost reduction methodology (SCORE) to deliver results Market induced change 1 Top Management Cross-functional teams Opportunity Workshop 2 Cost 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
  4. 4. SCORE: Sustainable Cost Reduction | February 2016 | © 2012-2016 Proprietary and Confidential shared.value.chainPage 4 Product Cost Optimization Workshops – Identify savings 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
  5. 5. SCORE: Sustainable Cost Reduction | February 2016 | © 2012-2016 Proprietary and Confidential shared.value.chainPage 5 Your Contact Adams-Lehmann-Straße 56 80797 München Tel. +49 89 461 331 868 Mobil +49 170 768 58 61 We help companies to achieve sustainably better performance Diplom-Kaufmann Michael D‘heur Founder & Managing Director Springer Gabler; Deutsch; Published Oktober 2013. More Information: Springer International; Englisch; Published April 2015. More Information: Join the Conversation @SharedxValue Media Partners & Publications