Cost excellence can save manufacturing businesses €millions – it’s just a question of focus
In a bid to improve profitability and create competitive advantage, manufacturer businesses across the world are implementing a variety of complex and far-reaching cost-reduction programmes.
Yet our analysis of hundreds of cost-reduction programmes shows that, despite their strategic importance, many fall short of expected savings by up to 50% and fail to deliver benefits for months or even years. This means manufacturing businesses are leaving €hundreds of millions of potential savings unrealised.
Frequently, cost-reduction programmes fail to achieve the expected benefits because only some of the key optimisation levers are put to use, and because they plateau too soon – before they can deliver maximum savings and create lasting impact.
Our experience and research shows that manufacturing business can achieve more from their cost reduction programmes by focusing on four key activities:
- Aligning manufacturing processes with overarching business strategy.
- Increasing revenue.
- Implementing cost reduction across all operations.
- Optimising assets and liquidity.
PA’s Performance Excellence programme reflects this understanding and recognises that a tailored response is required to address the real needs of individual client organisations and achieve cost reduction across all processes. We bring the right team to ensure performance improvement programmes deliver the expected benefits as early as possible. Our track-record of helping global manufacturing businesses to transform and grow means we are able to propose and implement a higher number of cost-reduction ideas; and continue to refine and develop these ideas as your programme progresses.
Our PA Perfect Cost Grid® for the automotive industry includes up to 1,000 suggestions for reducing cost, weight or manufacturing complexity – either across the value stream or for individual components. The techniques have been widely proven, helping European manufacturing businesses to save €millions and reduce product costs for individual automotive models by up to 25%.
Our experienced industry experts have used these techniques to help some of the world’s largest and most complex manufacturing and automotive organisations to make dramatic and quick improvements: We saved Magna Steyr double-digit million euros across their entire product lifecycle and we significantly reduced costs for the lithium-ion batteries they supply to buses and commercial vehicles. We helped Fiat turn around their business by driving savings of €100 million per annum (of which €80 million was realised in the first year).