Managing Director & Senior Partner, Leader Business Transformation Suite
Cost excellence goes beyond simple cost-cutting measures and supply chain efficiency. It enables increased transparency and accountability, higher employee morale, and faster decision-making. Most importantly, it lays the foundation for ongoing improvement, making companies more agile and less vulnerable to unfavorable or unexpected economic changes.
There are several hallmarks of cost excellence:
Putting these principles to work is not always easy. But companies that make a commitment to cost excellence will emerge leaner, more nimble, and more competitive. Here’s how.
First, company leadership and top management need to agree that change is needed, and then they should clearly state what they want to achieve. The reasoning and rules for change must be delivered in a compelling manner throughout the organization, as well as to suppliers, investors, and customers. This needs to happen based on full transparency of the current situation. Descoping should be a conscious decision.
Tailor the available methodologies and tools available to meet your specific needs and challenges. Which tools best fit your industry and your business? How can your company’s unique culture help determine which methodologies will work best?
Here’s where the in-depth diagnostics begin. For example, activity-based optimization can reveal how efficiently work is distributed in your organization. You can also review your organization’s structure to determine where layers can be eliminated and pay levels adjusted. Interviews and surveys generate qualitative information on effectiveness or the value a particular group adds to the business through its work. Supplement this data by examining key performance indicators and setting benchmarks against competitors.
Work out the details through internal workshops, and involve employees from lower levels of the business in order to ensure buy-in and incorporate new approaches. Identify key metrics and milestones, assign tasks to specific owners, and monitor performance.
Create a comprehensive execution plan. This will make it easier to track measures and milestones, and address any setbacks, shortfalls in cost savings, or delays. Celebrate early wins and success stories to build momentum throughout your organization.
Embed efficiency and effectiveness into your company’s DNA. Be willing to change any process that reverts to old behaviors. Sustainability is possible only if the entire organization supports the program. Continue to track key performance indicators and set benchmarks for continued improvement. By understanding and adjusting the way people behave, based on their goals and resources, you can make the right changes to achieve the desired results.