BCG’s integrated approach to effective cost management rapidly identifies the deep-rooted issues affecting an organization’s cost structure and implements customized, industry-specific initiatives to revitalize performance and enhance value.
Companies have more than one option to address cost pressures. With end-to-end budget or headcount reduction, the impact is immediate—but the benefits don’t last. Quick cuts simply do not address underlying problems, nor do they improve the longer-term health of the company.
BCG’s holistic cost management process efficiently and effectively transforms an organization’s business, taking into consideration direct costs such as labor and materials as well as overhead costs—which in turn allows for reinvestment in future growth, stability, and strategy. The result is effective cost optimization that boosts performance and margins while simultaneously unlocking total shareholder value.
Inflation, market uncertainty, and rising interest rates are all putting pressure on organizations. At the same time, organizations need to be investing in talent, sustainability, and digital to remain competitive. Higher operating expenses are squeezing margins, prompting companies to look at their cost structure for answers—while continuing to fund innovation and growth.
Unlike one-dimensional cost reduction or restructuring plans, BCG’s accelerated cost advantage approach resets costs within a strategic framework that is customized, precise, and thorough. Our total cost management process involves quickly diagnosing underlying operating issues, benchmarking performance, and then implementing short-, medium-, and long-term cost optimization initiatives and industry-specific measures to right-size expenses.
In parallel to optimizing costs, BCG experts help clients build a foundation for future competitive differentiation and growth by:
By redesigning the organization for improved accountability, customer service, and overall talent levels, we helped a US-based airline achieve an expected cost reduction of 15% to 20%
Through optimizing materials costs, we helped a global automotive equipment manufacturer realize a 12% reduction in direct product costs
As part of a major cost-restructuring effort focused on increasing efficiency, we enabled a $1.2 billion cost reduction for a leading health care company—freeing up resources for investments in products, marketing, and sales
By implementing a cost transformation program and reducing organizational complexity, we helped a large US supermarket chain achieve an expected increase in TSR of 20%
BCG has a vast array of proprietary tools and resources to guide clients’ cost transformation efforts. Our seamless, accelerated cost advantage approach starts with a rapid assessment phase to identify and prioritize areas of cost inefficiency where swift interventions are warranted—using benchmarks to compare a company’s performance to its peers. From there, our cost management experts leverage their experience and deep industry knowledge to deploy resources tailored to a client’s specific needs.
The approach incorporates the KEY by BCG portfolio and program management software, which has backed hundreds of successful cost optimization programs, accelerating value creation and managing complexity through every phase of the journey.
Our team of experts has an established track record across multiple industries, allowing them to guide and support an accelerated cost advantage approach for clients worldwide.
Companies that turn to cost containment solely as a lever for short-term survival miss a critical opportunity to reinvest in future growth, stability, and strategy, explains BCG’s Laura Juliano.
Most company efforts to reduce expenses fail. Four challenges block the way: two reflecting what costs get cut, and two related to how value is delivered.
A BCG survey of C-suite leaders reveals how they are setting priorities and taking action.
Aggressive cost cuts may be tempting, but they often leave companies less equipped to compete. Instead, companies should apply an old idea made new: zero-based budgeting.
The best organizations know how to turn adversity into opportunity. In this edition of BCG’s Executive Perspectives, we look at how leaders can respond to today’s unprecedented uncertainty by building a competitive cost advantage.
The pace of the energy transition is increasing, offering plenty of room for businesses to improve the sustainability of their operations and make their strategy and competitive offerings stand out.
In Forbes, BCG’s Tiffany Yeh explains how large retailers use AI algorithms to help forecast demand, anticipate inventory flow, capture customer data, and ultimately offset costs.
