Optimized Support Functions Reduce Costs

When business is going well, it’s easy for companies to get lulled into a sense of false security. This was the case for a European original equipment manufacturer (OEM) with sound financials and a strong market position. However, rising costs threatened to undermine future growth. BCG was called in to reduce costs and engage employees in the process.

The steadily rising costs for this automaker were due, in part, to inefficient and oversized support functions. The company also expected additional complexity and costs related to its ambitious growth strategy. It felt an urgent need to act, but that need didn’t resonate with employees, who felt that the company’s strong market position was a sign that all was well.

To address these issues and streamline support functions, the OEM worked with BCG to create a holistic lean cost optimization program. The project had four main goals:

  1. Create transparency. The team assessed processes and activities that tied up most resources.
  2. Increase efficiency. The team defined and put in place measures for increasing process and organizational efficiency.
  3. Ensure sustainable implementation. The team prioritized support measures and monitored implementation to avoid “straw-fire” effects, i.e., short-term, unsustainable results.
  4. Set the basis for continuous improvement. The entire organization was enabled to recognize and tackle inefficiencies. This fostered a culture of continuous improvement.

With BCG’s help, the auto manufacturer realized significantly lower costs and lasting impact throughout the organization.