Innovation can serve as a powerful means for improving efficiency and driving
margin improvement. To achieve cost excellence,
leaders should take advantage of new technologies and tools and even consider
the way their organizations approach innovation itself.
A conventional way to approach a cost transformation exercise is to look at
standard efficiency levers. Whilst there is sufficient value sitting there,
I feel a needle mover or a big change happens when you fundamentally reimagine
the process. What if you were to do this completely differently?
You're actually looking at a 30 to 40% reduction by re-imagining the process and
eliminating many chunks.
It often not only results in a better or a lower cost structure,
but a more effective process as well.
It's a great question.
We've found that the combination of more traditional or predictive AI and
generative AI is incredibly amplifying when you think about value creation.
And we find that there are value opportunities both in unlocking new top line
gains that allow you to get better leverage out of your cost base and in taking
cost out so that you can flow more through to the bottom line.
And we're finding this in every industry across the entire value chain.
You think about commercial use cases,
how you better engage your customers - B2B or B2C customers.
The area that we're seeing the most investment in currently for manufacturers is
AI. Manufacturing is a data rich environment generating one terabyte of data per
day for the average manufacturing plant.
And you can use this data combined with the power of AI to make better
day-to-day decisions. Areas like scheduling, areas like maintenance, quality,
even the SAP points that you run your manufacturing line to.
How should leaders be thinking about costs and innovation?
A critical element of looking at costs in your innovation spend
is ensuring that costs are aligned with strategic priorities.
Looking at the innovation portfolio, where are the dollars going?
What strategic part of your enterprise strategy do those spends align to?
And what is needed and what is not is a critical element of tackling costs in
innovation in R&D.