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-: Creating competitive cost advantage
is all about utilizing your costs to invest in the future.
Looking at cost reduction simply as a means of survival
misses the opportunity to reinvest for future growth,
stability, and strategy.
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Reducing cost is actually about freeing up resources
to invest in important strategic moves,
growth for the future,
building capabilities in the team,
and critical initiatives like climate and sustainability.
(charging lead clunking into connection port)
In order for leaders to determine
which cost reduction approaches are right
for their organization
given the current context,
they have to answer questions like
what is the magnitude of savings they require?
How quickly do they want savings
to come out of the organization?
Are they willing to make tough decisions
about labor, operating model,
and fundamental core processes?
And where is it viable
to actually reduce procurement cost and spend,
given things like regulatory requirements, customer needs,
and supply shortages out in the market?
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The quickest way to savings is to look at things like layers
within your organization,
and aim to reduce indirect labor costs.
Next, you can move towards procurement spend,
both direct and indirect.
If you're willing to go a little more strategic
then you can look at your operating model,
fundamental functional handovers,
and processes that transverse those functions.
And finally, the most strategic
and holistic approach is to look
at an end-to-end operational transformation
and actually reduce complexity,
optimize on things like design to value
and take a digital thread through your organization.
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