Customer
Industrial Goods; Leading Maintenance, Repair and Overhaul Organization

Lars
Linnekogel

Transformation Management

How TTE delivered 15% net cost reduction for an industrial goods company

Case

Cost optimization

Project Scope

The client asked TTE for support in identifying cost-optimization opportunities across the business division in scope with the focus on reducing spending where possible and identifying higher value spending opportunities for potential re-allocation.

Approach

The finance team of the client and TTE conducted a joint baselining exercise to determine the status quo in cost structure and development over time. Based on this cost structure analysis, the project team identified priority areas for deeper analysis in largest cost buckets or in those cost buckets growing significantly.

 

“Getting everyone around the table and structuring ideas on how to get costs down is extremely effective – much better than from any outsider.”

Lars Linnekogel, Managing Director

 

In this exercise, the internal clients or consumers for a specific cost position and the responsible procurement or buying colleague conducted cost workshops facilitated by TTE. In these workshops, the client team discussed for each position what measures could be taken to reduce the spend in the respective area, for example, the adjustment of the consumption of an item or procurement in a smarter way.

Once cost reduction ideas were collected, the specific functional team validated whether the idea was sustainable or whether it had any negative impact if executed. Those items cleared were then passed on to the procurement team for execution or adjusted consumption targets were set for the individual teams.

But the project team was also tasked with identifying if the reallocation of the budget was beneficial. As the overall spend budget was set, the team held workshops with the functional teams to identify if there were any concrete business cases for a greater spend. One example was to spend more money in meeting room equipment and better supplies in order to make meetings more productive.

Results

The project delivered significant cost optimization:

  • 15% net cost reduction after reallocated spend into other areas
  • 7% of total cost were reallocated by the project team and with functional teams’ buy-in
  • Increased cost-benefit awareness in division, measured through pulse check with TTE’s Surwayne solution


The Team
Enablers



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