Companies are permanently assessing the cost structure and looking for cost reduction opportunities. Often, challenging targets are set for company’s departments, locations or business units. Such a fragmented approach often results in sub-optimal and temporary cost savings.
If not approached in a multi-disciplinary way, a cost reduction exercise for packaging material that is based on decreasing the purchase spend, might result in a higher number of quality problems or additional handling costs. Overlooking the consequences of certain actions is regularly the cause for reversing the initiative.
Deloitte is convinced cost-cutting can be embedded in the corporate structure and culture so that it does not cause a major disruption every time another programme is introduced – but companies need to think of cost-cutting as a core capability and entrench it into everyday management attitudes. Therefore, Deloitte has developed an Enterprise Cost Reduction methodology to help companies control their cost reduction programmes.
Enterprise cost reduction incorporates a scalable and sustainable approach to creating value through transformational cost reduction opportunities. It is a strategic imperative that requires both vision and operational discipline, with a value-oriented mindset and a bias for execution.