An industrial company’s purchasing department achieved a 20% reduction in costs while maintaining quality levels.
An industrial company facing declining quality in its products set out to increase investment in research and development. Consequently, it had to cut costs in other areas.
The company ordered the purchasing department to reduce costs by 20% without eroding supply quality. The purchasing unit consisted of two roles: “category strategists,” who figured out how to buy goods, and “buying units,” who executed the strategy. The attempted cost-cutting strategies failed, and finger-pointing ensued. The company needed assistance drilling down to the source of the trouble.
The company called in BCG to help it address the problems. BCG applied the four-step Smart Simplicity approach.