Companies are permanently assessing the cost structure and looking for cost reduction opportunities. Challenging targets are often 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 multidisciplinary way, a cost reduction exercise to decrease the purchase spend for packaging material 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 that 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 it as a core capability and entrench it into everyday management attitudes. Therefore, Deloitte has developed an ECR methodology to help companies control their cost reduction programmes.
ECR incorporates a scalable and sustainable approach to creating value through transformational cost reduction opportunities. It is a strategic imperative with a value-oriented mindset and a bias for execution, that requires both vision and operational discipline.