Cost Reduction
At DSS we treat cost reduction as an aspect of operational improvement. The aim is to generate value for your organization, not to slash costs indiscriminately. We believe it is critical to systematically identify where costs have moved out of line with what is really needed. Once costs have been brought down, it’s essential that they stay down. This normally requires an expansion or improvement of existing routines and rituals around costs and their drivers to ensure the lower cost level is sustained.
Making a decision on where to cut costs cannot be arbitrary. If it is, the chances are you’ll do more harm than good. All costs build up for a reason. Reducing or eliminating a cost requires an understanding of the reason why the cost item exists and the potential business-wide risks and consequences of reducing it. It is, for example, easy to buy cheaper spares for essential equipment, but if the mean-time-between-failure (MTBF) reduces and unplanned down-time increases, then the value trade-off was probably a bad one.
Getting the job done effectively doesn’t need to be a drawn-out exercise. In a few weeks, people with the right tools and approach can typically identify most cost opportunities, ensure the risks are managed, develop appropriate implementation plans, and align key stakeholders around each action item.
Managing the Risks and Benefits of Cost Reduction
DSS uses a cost diagnostic process based on best practices and extensive experience to identify the best route for your organization. It includes clear deliverables and culminates in an improvement roadmap developed jointly with you.
The process has five distinct phases which are generally completed over a period of 4-6 weeks:
1. Communication with Teams and Sites to align on objectives and approach
2. Determining the Fact Base & Spend Baselines for each area
3. A comprehensive Analysis of the Status Quo based on interviews, workshops, site/area visits and data analysis
4. Prioritization of Cost Improvement Opportunities and identification of necessary changes to the Management Operating System to achieve goals
5. Creation of a Cost Improvement Roadmap endorsed by senior stakeholders
In general terms, we prioritize quick wins to improve your cost position swiftly and follow that up with more complex cultural and behavioral improvements.
We have a clear process for managing ideas through the implementation pipeline so we can clearly track and deliver savings.
DSS wants your people on our team, working side-by-side with us to peel the onion on your costs and find what will work in your business. We bring the tools, the process, the experience and, where needed, the technical expertise to cut through the cost challenge you are facing while building problem ownership and capability among your people. When we leave, your organization will have the tools and behaviors to ensure sustainability of results.
What Can the DSS Cost Reduction Process Achieve for You?
Clients who have worked with us, typically benefit from:
- A clear overview of cost reduction opportunities and their impact
- Alignment of the organization on a common goal
- A project that is executed with rigor and objectivity, in a highly collaborative and supportive style that nonetheless challenges the conventional wisdom
- Processes that identify cost saving ideas, assist with implementation, and promote lasting benefits
- Rapid and tangible results that don’t put operations, people, or production at risk
- Sustainable cost reduction
Our team is experienced in a wide variety of industry challenges, expenditure categories and geographies.
