Cost Reduction
The need to reduce costs in most cases leads to increased anxiety and stress. In such a situation it often makes sense to work with an outsider, someone who understands the business, who can take a step back to help see clearly what can and cannot be done, and who has the experience to act as a guide or consultant through the process of identification, decision making, communication and implementation.
What are the options? Could cost reduction negatively impact the top line and employee morale? Should costs be reduced structurally and radically or will an incremental effort suffice? What are the cost drivers, and what is the benchmark? Or: where are costs incurred unnecessarily? Will any jobs get lost? What are the risks? And how do we get it done?
At Implementum we have a 2 phase approach to find the answers to questions like these. These phases are:
1. Analysis & Design (A&D)
In the A&D phase, if needed we first take a step back to ensure strategic options have been evaluated before decisions are made. Where relevant, we use our Decision & Risk Analysis methodology and our Business Model Alignment framework to determine whether the cost reduction project is indeed the right thing to do.
Where most consultants focus on data, our experience is that you should also look at activities. Only by following a product, an order, a complaint or an employee through the process or through the day, can you see the waste and the improvement potential, and gain trust in the “TO BE” design.
An A&D phase can be completed in a short time-frame, ranging from a few weeks to a few months. Realizing the detailed design and real change will happen in the next phase by involving broader parts of the organization.
2. Results Delivery (RD)
In the RD phase, the focus shifts to implementation. Typically what is needed is ongoing senior management support, further detailing of the design, strict project management, and significant mobilization and communication efforts. The RD phase can range from short and swift up to 1 or 2 years, depending on the type of project.
In our experience, if you do not maintain the focus and engage the organization, your plans will likely fail. External support may significantly increase your chances in this phase, although the change really needs to be owned by the organization itself.