Cost reduction programs are both a sprint and a marathon. Many initiatives start with high ambitions, but underestimate the hurdles of implementation. As a result, successes are short-term at best and are not reflected in the profit and loss statement (P&L).

ROI-EFESO offers a tried and tested approach to optimizing cost structures along industrial value chains, which combines rapidly effective cost savings with a sustainable streamlining of your processes. In doing so, we are guided by three criteria with which we secure the performance and further development of your value creation processes in the long term:

• Process excellence: the central driver for the cost base.
• Flexibility: those operating in volatile markets must be able to respond to sales fluctuations or new, competitors at any time.
• Resilience: cost reduction programs must specifically take disruptions such as interrupted supply chains into account.

Our experts develop a customized cost reduction program for your organisation that delivers both levers for fast-acting savings effects and effective long-term improvement measures.

In an integrated top-down/bottom-up approach, we first identify and evaluate the cost and expense drivers along your value chain and in indirect areas. We then derive suitable measures to realize the identified cost reduction potentials and accompany their implementation in agile sprints. Through continuous monitoring and bridging of the savings potential into the income statement, we ensure the success of implementation and the effectiveness of the measures in the balance sheet.

At the beginning of the program, the ROI-EFESO team analyses the cost structure within the organisation. Based on the income statement and internal cost accounting, we identify cost drivers, compare planned and actual data and derive cost targets for your organisation (top-down). In doing so, we use the following instruments, among others:

• Cost structure analysis for identification and weighting of cost blocks
• Allocation of cost drivers to sub-processes, e.g. via value driver trees
• Trend analysis: presentation of cost structures and cost blocks
• Sensitivity analysis to determine P&L effectiveness

In parallel, we look at the central functional areas such as production, supply chain management, procurement or R&D in order to identify possible weak points, derive initial measures and quantify the resulting savings potential (bottom-up). In doing so, we look at the following cost reduction levers, among others:

• Reduction of waste and shortening of lead times
• Consolidation of the supplier base
• Review of make-or-buy decisions
• Review of costs in indirect areas (zero-based approach), process flow analysis (Makigami)

This is followed by a comparison of the identified savings potentials with the organization's cost targets in order to derive a resilient roadmap. Here we focus on these results:

• Evaluation of the measures with regard to their impact on financial statements and relevant financial indicators, implementation time and implementation effort (incl. costs and investments)
• Preparation of a prioritized measures roadmap

Phase 3 comprises the systematic implementation and continuous performance measurement of the defined cost reduction measures. The ROI-EFESO team accompanies you in an agile approach and ensures the effectiveness of the measures through close-meshed controlling. The following activities are in the focus:

• Fast, pragmatic and short-cycle implementation of the measures in agile sprints with a system of degrees of hardness
• Monitoring of implementation success and its P&L effectiveness
• Continuous identification of further measures to achieve the defined savings targets