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What is a good generic checklist/strategy/framework to use when cutting costs in a case to think about all the different ways to do so?
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Hi,
As usual, no predefined framework that can be used everywehere. Common sens will for sure help more :)
If looking for cost reduction, you need to understand :
- what are the main cost of the company : so you need to understand the activity and think about the cost structure it involves. Depending on the business you could identify this with the value chain and / or the type of cost identification (labor, raw material, etc.)
- Focus your effort on the biggest cost categories : this will create more impact in absolute value. eg. 20% saving on 100M€ is better than 20% savings on 1M€ :)
- tackle each category one by one : starting with the biggest cost buckets
Hope this helps
Best
Benjamin
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Hi,
I would recommend the following:
Structuring:
- What is the cost composition and what are the biggest costs
- Benchmarking of the biggest costs to find the improvement potential
- Process improvements to meet the benchmarks
- Costs and benefits of the proposed initiatives
The key concepts that you have to learn:
- Internal / external benchmarking
- Idle time
- Core processes (usually are optimized) and the supporting processes (usually are cut)
- Math structures (Frequency of operations * time per operation)
- Other useful structures (e.g. people - process - technology)
Feel free to reach me for further help with these cases.
Best
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