cost reduction - Blog - Global Risk Community2024-03-28T15:33:54Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/cost+reductionJobs-to-be-Done Growth Strategy Matrix: 5 Approaches to Satisfy Customers' Jobshttps://globalriskcommunity.com/profiles/blogs/jobs-to-be-done-growth-strategy-matrix-5-approaches-to-satisfy-cu2023-08-28T12:10:00.000Z2023-08-28T12:10:00.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p> </p><p class="MsoNormal"> </p><p><a href="{{#staticFileLink}}12201520472,RESIZE_1200x{{/staticFileLink}}"><img class="align-full" src="{{#staticFileLink}}12201520472,RESIZE_710x{{/staticFileLink}}" alt="12201520472?profile=RESIZE_710x" width="710" /></a> Today’s competitive environment calls for unique approaches to win customers.</p><p> Following the identification of a consumer category, organizations need to determine which customers to target and how. It is necessary to agree on the full scope of the customer job, including their underserved and overserved needs. Now is the moment for <a href="https://flevy.com/browse/flevypro/leadership-competency-model-3661">Leadership</a> to consider and choose the most suitable strategy required for market success. It is time to determine whether it is necessary to add a new feature to an existing product, develop a cheaper version of an existing product, or pursue an entirely different path.</p><p>The <a href="https://flevy.com/browse/flevypro/jobs-to-be-done-jtbd-growth-strategy-matrix-7421">JTBD Growth Strategy Matrix</a> outlines <a href="https://flevy.com/browse/marketplace/agile-business-to-business-product-market-strategy-823">market strategies</a> to target the appropriate consumers and meet their needs. The matrix facilitates the selection of the most effective strategy for a given scenario. The product must complete a customer's task faster, more effectively, and more affordably than its competitors.</p><p>On the four quadrants of a matrix, the JTBD Growth Strategy Framework depicts the potential for product or service offerings to complete customers' duties better, worse, more cheaply, or more expensively. It allows businesses to target different consumer segments with a value proposition by situating them in the appropriate quadrants. </p><ul><li class="MsoNormal">The Y axis of the matrix indicates whether the organization can complete tasks more or less proficiently than its competitors.</li><li class="MsoNormal">The X axis, on the other hand, indicates the company's ability to offer more expensive or cheaper products than its competitors.</li><li class="MsoNormal"><span style="text-indent:-0.25in;">The upper left quadrant is designed to accommodate consumers with unmet needs.</span></li><li class="MsoNormal"><span style="text-indent:-0.25in;">Customers with limited options occupy the lower left quadrant. To attract these consumers, organizations should offer superior performance products and charge a premium price. Even if they offer no competitive advantage, companies can charge this group a premium for their goods.</span></li><li class="MsoNormal"><span style="text-indent:-0.25in;">The right upper quadrant serves consumers whose needs are either underserved or overserved. These consumers will be attracted to a product with superior performance and a low price.</span></li><li class="MsoNormal"><span style="text-indent:-0.25in;">The right lower quadrant is comprised of non-customers and consumers whose needs are met in excess. To attract this consumer segment, businesses should price their products more affordably.</span></li></ul><p class="MsoListParagraphCxSpFirst" style="text-indent:-0.25in;"> Depending on the circumstances, organizations can employ one of the following five strategies to meet the specific needs of consumers in the four quadrants of the JTBD Growth Strategy Matrix.</p><ol start="1" type="1"><li class="MsoNormal" style="line-height:normal;"><strong><span style="font-size:12pt;font-family:'Times New Roman', serif;">Differentiated Strategy </span></strong></li><li class="MsoNormal" style="line-height:normal;"><strong><span style="font-size:12pt;font-family:'Times New Roman', serif;">Dominant Strategy</span></strong></li><li class="MsoNormal" style="line-height:normal;"><strong><span style="font-size:12pt;font-family:'Times New Roman', serif;">Disruptive Strategy </span></strong></li><li class="MsoNormal" style="line-height:normal;"><strong><span style="font-size:12pt;font-family:'Times New Roman', serif;">Discrete Strategy</span></strong></li><li class="MsoNormal" style="line-height:normal;"><strong><span style="font-size:12pt;font-family:'Times New Roman', serif;">Sustaining Strategy</span></strong></li></ol><p><a href="{{#staticFileLink}}12201521456,original{{/staticFileLink}}"><img class="align-full" src="{{#staticFileLink}}12201521456,RESIZE_710x{{/staticFileLink}}" alt="12201521456?profile=RESIZE_710x" width="710" /></a></p><p><span style="font-size:12pt;font-family:'Times New Roman', serif;">Let’s talk about the first 3 strategies in detail.</span></p><p class="MsoNormal" style="line-height:normal;"><strong><span style="font-size:13.5pt;font-family:'Times New Roman', serif;">Differentiated Strategy</span></strong></p><p>Many of the world's most profitable and rapidly expanding businesses employ a Differentiated Strategy because, when executed effectively, it generates astronomically high profits. This strategy is employed to provide underserved customer segments with a new, pricier product or service that performs a customer's job more efficiently.</p><p>The strategy permits a company to enter a market at the upper end, acquire a significant portion of profits, and then penetrate the market to increase market share. Through <a href="https://flevy.com/browse/flevypro/the-innovation-process-3625">operational innovation</a> and production <a href="https://flevy.com/browse/flevypro/pillars-of-sustainable-cost-reduction-3007">cost reduction</a>, an organization is able to simultaneously reduce the price of its existing products and introduce new, superior products.</p><p class="MsoNormal"><strong>Dominant Strategy </strong></p><p>Businesses that target every consumer in a market with a new product or service that performs the same function noticeably more effectively and at a lower price employ the Dominant Strategy. This strategy necessitates investments in a new product platform, competencies, resources, and talent, rendering defense impossible for the overwhelming majority of incumbents.</p><p>According to research, organizations employing a Dominant Strategy can be successful if their <a href="https://flevy.com/browse/flevypro/creating-value-propositions-1709">value propositions</a> are at least 20% superior and less expensive than those of their competitors.</p><p class="MsoNormal"><strong>Disruptive Strategy </strong></p><p>Organizations use Disruptive Strategy to target overserved customers or non-consumers with a new offering that allows them to complete a job more inexpensively but less effectively than competing offerings.</p><p><span style="font-size:12pt;font-family:'Times New Roman', serif;">Interested in learning more about the other Product Strategies? You can download <a href="https://flevy.com/browse/flevypro/jobs-to-be-done-jtbd-growth-strategy-matrix-7421"><span style="color:#0000ff;">an editable PowerPoint presentation on JTBD Growth Strategy Matrix here </span></a>on the <a href="https://flevy.com/browse"><span style="color:#0000ff;">Flevy documents marketplace</span></a>.</span></p><p class="MsoNormal" style="line-height:normal;"><strong><span style="font-size:13.5pt;font-family:'Times New Roman', serif;">Do You Find Value in This Framework?</span></strong></p><p><span style="font-size:12pt;font-family:'Times New Roman', serif;">You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library"><span style="color:#0000ff;">FlevyPro Library</span></a>. <a href="https://flevy.com/pro"><span style="color:#0000ff;">FlevyPro</span></a> is trusted and utilized by 1000s of management consultants and corporate executives.</span></p><p><span style="font-size:12pt;font-family:'Times New Roman', serif;">For even more best practices available on Flevy, have a look at our top 100 lists:</span> </p><ul type="disc"><li class="MsoNormal" style="line-height:normal;"><span style="font-size:12pt;font-family:'Times New Roman', serif;"><a href="https://flevy.com/top-100/strategy"><span style="color:#0000ff;">Top 100 in Strategy & Transformation</span></a></span> </li><li class="MsoNormal" style="line-height:normal;"><span style="font-size:12pt;font-family:'Times New Roman', serif;"><a href="https://flevy.com/top-100/organization"><span style="color:#0000ff;">Top 100 in Organization & Change</span></a></span> </li><li class="MsoNormal" style="line-height:normal;"><span style="font-size:12pt;font-family:'Times New Roman', serif;"><a href="https://flevy.com/top-100/consulting"><span style="color:#0000ff;">Top 100 Consulting Frameworks</span></a></span> </li><li class="MsoNormal" style="line-height:normal;"><span style="font-size:12pt;font-family:'Times New Roman', serif;"><a href="https://flevy.com/top-100/digital"><span style="color:#0000ff;">Top 100 in Digital Transformation</span></a></span> </li><li class="MsoNormal" style="line-height:normal;"><span style="font-size:12pt;font-family:'Times New Roman', serif;"><a href="https://flevy.com/top-100/opex"><span style="color:#0000ff;">Top 100 in Operational Excellence</span></a></span><p> </p></li></ul><p> </p><p class="MsoNormal"> </p><p> </p><p> </p><p> </p></div>10 Rules for Cost Reductionhttps://globalriskcommunity.com/profiles/blogs/10-rules-for-cost-reorganization2023-02-03T14:11:54.000Z2023-02-03T14:11:54.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p><span style="font-size:12pt;"><a href="{{#staticFileLink}}10953726100,RESIZE_1200x{{/staticFileLink}}"><img class="align-full" src="{{#staticFileLink}}10953726100,RESIZE_710x{{/staticFileLink}}" alt="10953726100?profile=RESIZE_710x" width="710" /></a>Cost Transformation is a challenge that a firm must confront several times during its lifetime. Effective and lasting Cost Transformation affords organizations the chance to alter their whole direction. It may result in the sale of existing enterprises, even if they are successful, in the event that they do not align with the Strategy or the <a href="https://flevy.com/browse/flevypro/distinctive-capabilities-framework-2657">company's most distinctive capabilities</a>.</span></p><p><span style="font-size:12pt;">Of late, Activist Shareholders are increasingly driving such Transformations.</span></p><p><span style="font-size:12pt;">Activist shareholders are investors in a corporation (often hedge funds) who want radical changes to the way organizations do business. Activist investors often envisage that management teams will quite significantly decrease expenses within a very short time frame.</span></p><p><span style="font-size:12pt;">Analysis of data shows that activist shareholders have generated double-digit returns for investors, when other investment funds generated single-digit returns. Investors now seek activist funds in their portfolios with growing frequency.</span></p><p><span style="font-size:12pt;">Organizations can prepare for these funds by foreseeing the changes demanded by activist shareholders and implementing a proactive approach to <a href="https://flevy.com/browse/cost-reduction-assessment-cost/enterprise-cost-reduction-approach-704">reducing enterprise costs</a>.</span></p><p><span style="font-size:12pt;">Organizations may benefit from activist investors approach in times of intense cost reduction pressure, such as in a recession.</span></p><p><span style="font-size:12pt;">Although unorthodox, the activist investor approach to Cost Transformation may be modified to assist firms maneuver through times of uncertainty. Companies may demonstrate foresight by proactively adopting control of their cost base and creating stronger and productive organization.</span></p><p><span style="font-size:12pt;">The following <a href="https://flevy.com/browse/flevypro/10-principles-of-cost-transformation-6795https:/flevy.com/browse/flevypro/10-principles-of-cost-transformation-6795">10 principles for Cost Transformation</a> were developed by PwC's experts to assist corporations in executing the activist role themselves.</span></p><p><span style="font-size:12pt;"> </span></p><ol><li><span style="font-size:12pt;"><strong>Transform sizably and quickly.</strong></span></li><li><span style="font-size:12pt;"><strong>Reduce headcount first.</strong></span></li><li><span style="font-size:12pt;"><strong>Rationalize what to retain, not what to eliminate.</strong></span></li><li><span style="font-size:12pt;"><strong>Create atmosphere of possibilities not dread.</strong></span></li><li><span style="font-size:12pt;"><strong>Stir the executive levels determinedly.</strong></span></li><li><span style="font-size:12pt;"><strong>Review in entirety, even the protected interests.</strong></span></li><li><span style="font-size:12pt;"><strong>Form an adjacent setup for Change Management.</strong></span></li><li><span style="font-size:12pt;"><strong>Question the manner of conducting business.</strong></span></li><li><span style="font-size:12pt;"><strong>Review end-to-end processes.</strong></span></li><li><span style="font-size:12pt;"><strong>Exhibit instant successes.</strong></span></li></ol><p><span style="font-size:12pt;"> <a href="https://flevy.com/browse/flevypro/10-principles-of-cost-transformation-6795" target="_blank"><img class="align-center" src="{{#staticFileLink}}10953726461,RESIZE_710x{{/staticFileLink}}" alt="10953726461?profile=RESIZE_710x" width="710" /></a></span></p><p><span style="font-size:12pt;">Initial 5 principles reflect the tough objectives of activist shareholders. Following 5 concentrate on <a href="https://flevy.com/browse/marketplace/strategic-cost-reduction-training-729">strategic cost reduction</a> and streamlining, which are the core ideas around which every program should be constructed.</span></p><p><span style="font-size:12pt;">Let's go a little more into a few of the principles.</span></p><ol><li><span style="font-size:12pt;"><strong>Transform Sizably and Quickly</strong></span></li></ol><p><span style="font-size:12pt;">The past method of cutting expenses, for instance by 10% over a 5-year period, is no longer acceptable to activist shareholders. They want a substantial decrease over a very short period of time, such as 20% or more in 24 months, with 50% of the decrease occurring in the initial 12 to 18 months.</span></p><p><span style="font-size:12pt;">It has been demonstrated that rapidly and substantially transforming expenses provides substantial leverage. A study of 29 cost-cutting initiatives revealed that organizations that cut costs sizably and quickly were able to generate 33% greater cost savings in practically a 1/3rd of the time.</span></p><ol start="2"><li><span style="font-size:12pt;"><strong>Reduce Headcount First</strong></span></li></ol><p><span style="font-size:12pt;">Traditional model of cost reduction recommends removing superfluous work before lowering headcount. This requires a considerable amount of time, for several reasons. The new strategy prioritizes headcount reduction above process and system modifications.</span></p><p><span style="font-size:12pt;">Lowering headcount creates a gap, which the remaining staff must fill so as to keep their portion of the firm operational. By stepping up, the remaining employees are compelled to select and manage tasks, resulting in more effective and efficient operations.</span></p><ol start="3"><li><span style="font-size:12pt;"><strong>Rationalize What to Retain, Not What to Eliminate</strong></span></li></ol><p><span style="font-size:12pt;">Entire spending is investment. Each expense is a choice, not in terms of what to cut from the budget, but where to invest. Expenses must be rethought from the ground up; each expenditure must be seen as potentially eliminable. Correct decisions are those that diminish the gap between Strategy and Execution.</span></p><p><span style="font-size:12pt;">Interested in learning more about 10 Rules for Cost Reorganization? You can download <a href="https://flevy.com/browse/flevypro/10-principles-of-cost-transformation-6795https:/flevy.com/browse/flevypro/10-principles-of-cost-transformation-6795">an editable PowerPoint presentation on 10 principles for Cost Transformation here</a> on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</span></p><p><span style="font-size:12pt;"><strong>Do You Find Value in This Framework?</strong></span></p><p><span style="font-size:12pt;">You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives.</span></p><p><span style="font-size:12pt;">For even more best practices available on Flevy, have a look at our top 100 lists:</span></p><ul><li><span style="font-size:12pt;"><a href="https://flevy.com/top-100/strategy">Top 100 in Strategy & Transformation </a></span></li><li><span style="font-size:12pt;"><a href="https://flevy.com/top-100/consulting">Top 100 Consulting Frameworks </a></span></li><li><span style="font-size:12pt;"><a href="https://flevy.com/top-100/digital">Top 100 in Digital Transformation </a></span></li><li><span style="font-size:12pt;"><a href="https://flevy.com/top-100/opex">Top 100 in Operational Excellence </a></span></li><li><span style="font-size:12pt;"><a href="https://flevy.com/top-100/organization">Top 100 in Organization & Change </a></span></li></ul><p><span style="font-size:12pt;"> </span></p></div>Site Selection -- 5Cs of Site Selectionhttps://globalriskcommunity.com/profiles/blogs/site-selection-5cs-of-site-selection-12021-11-22T17:10:55.000Z2021-11-22T17:10:55.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p><span style="font-size:12pt;"><a href="{{#staticFileLink}}9833684489,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}9833684489,RESIZE_400x{{/staticFileLink}}" alt="9833684489?profile=RESIZE_400x" width="297" height="198" /></a>Site Selection is the practice of choosing a new <a href="https://flevy.com/business-toolkit/facility-management">facility location</a>. It involves measuring the needs of a new project against the merits of potential locations. The practice became popular during the 20<sup>th</sup> century, as operations of many organizations expanded to new geographies on a national and international scale.</span></p><p><span style="font-size:12pt;">Selection of sites has been known to have taken place due to factors such as:</span></p><ul><li><span style="font-size:12pt;">Best required skills being available in a particular city.</span></li><li><span style="font-size:12pt;">Setting up in an off-the-trail location because all operations will be managed remotely.</span></li><li><span style="font-size:12pt;">Following the trend to set up offices and facilities in a particular city because every company is doing so.</span></li><li><span style="font-size:12pt;">Factory facilities of the company being close-by.</span></li><li><span style="font-size:12pt;">Top boss living in the vicinity.</span></li><li><span style="font-size:12pt;">Person tasked with choosing the site liking the area for a particular feature such as restaurants and the like.</span></li></ul><p><span style="font-size:12pt;">Making such significant long-term choices based on haphazard and indifferent reasons is a blunder. The consequences of the mistake are exacerbated when such sites are being selected in emerging markets.</span></p><p><span style="font-size:12pt;">Site selection, in particular, for R&D, Design, and Engineering, warrants a more serious approach than is given to it. Employing a formalized selection method aids in eliminating sentiment in the concluding decision. The orderly selection procedure is also valuable in conveying the ultimate decision to all involved. Selection criteria and their priority should be agreed to in advance for removal of any partiality from the Site Selection process.</span></p><p><span style="font-size:12pt;">Site Selection, especially when being done in emerging markets, has to be conducted while considering at least 5 factors—or the 5 Cs of Site Selection. Companies ought to identify which among the 5 factors they deem significant and prioritize the factors accordingly:</span></p><ol><li><span style="font-size:12pt;"><strong>Cost</strong></span></li><li><span style="font-size:12pt;"><strong>Capacity</strong></span></li><li><span style="font-size:12pt;"><strong>Capability</strong></span></li><li><span style="font-size:12pt;"><strong>Communications</strong></span></li><li><span style="font-size:12pt;"><strong>Culture</strong></span></li></ol><p><span style="font-size:12pt;"><a href="https://flevy.com/browse/flevypro/5-cs-of-site-selection-5959"><img class="aligncenter size-full wp-image-10015" src="https://flevy.com/blog/wp-content/uploads/2021/11/Slide-Deck-image-5Cs-of-site-selection.png" alt="" width="738" height="554" /></a></span></p><p><span style="font-size:12pt;">Selecting a site in light of the set priority order, the company has to take into consideration the characteristics of the site in the present time as well as in 3 to 5 years.</span></p><p><span style="font-size:12pt;">Let us delve a little deeper into some of the factors.</span></p><h3><span style="font-size:12pt;"><strong>Cost</strong></span></h3><p><span style="font-size:12pt;">Ideally, <a href="https://flevy.com/business-toolkit/cost-reduction">Cost Reduction</a> should not be the only factor influencing site selection decisions. If Cost factor is predominant in the decision, then the local standard of living and the changes there to, have to be taken into consideration. Costs in setting up a site include items such as:</span></p><ul><li><span style="font-size:12pt;">Buying or leasing land.</span></li><li><span style="font-size:12pt;">Office equipment costs.</span></li><li><span style="font-size:12pt;">Communication infrastructure and operations costs.</span></li><li><span style="font-size:12pt;">IT infrastructure costs.</span></li><li><span style="font-size:12pt;"><a href="https://flevy.com/business-toolkit/employee-training">Employee Training</a> costs.</span></li></ul><p><span style="font-size:12pt;">Companies basing their decisions exclusively on Cost factor rather than what suits their requirements end up paying more than estimated.</span></p><h3><span style="font-size:12pt;"><strong>Capability</strong></span></h3><p><span style="font-size:12pt;"><a href="https://flevy.com/business-toolkit/capability-maturity-model">Capability</a> is the ability of the site under consideration to provide the necessary infrastructure, resources, and the work/ operational environment required by the company. Capability includes existence of exclusive skills and expertise that a company explicitly needs.</span></p><p><span style="font-size:12pt;">Also advantageous to capability are nearby R&D, design, testing, and prototyping centers setup by foreign and local companies.<strong> </strong></span></p><h3><span style="font-size:12pt;"><strong>Capacity</strong></span></h3><p><span style="font-size:12pt;">Capacity refers to the abundance of qualified skill available on the site under consideration. Capacity comes into play when the company needs rapid scaling up of its operations.<strong> </strong></span></p><p><span style="font-size:12pt;">Although the 5 Cs are of extreme significance, there is an additional factor that cannot be ignored—the Customer. Recent advances in technology and communication have further empowered the Customer. The result is that more organizations are seeking to focus on Customer-centric Design.</span></p><p><span style="font-size:12pt;">Interested in learning more about 5 Cs of Site Selection? You can download <a href="https://flevy.com/browse/flevypro/5-cs-of-site-selection-5959">an editable PowerPoint on <strong>5 Cs of Site Selection</strong> here </a>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</span></p><h3><span style="font-size:12pt;"><strong>Do You Find Value in This Framework?</strong></span></h3><p><span style="font-size:12pt;">You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</span></p><blockquote><p><span style="font-size:12pt;">“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</span></p><p><span style="font-size:12pt;">– Bill Branson, Founder at Strategic Business Architects</span></p></blockquote><blockquote><p><span style="font-size:12pt;">“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</span></p><p><span style="font-size:12pt;">– David Coloma, Consulting Area Manager at Cynertia Consulting</span></p></blockquote><blockquote><p><span style="font-size:12pt;">“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</span></p><p><span style="font-size:12pt;">– Roderick Cameron, Founding Partner at SGFE Ltd</span></p></blockquote></div>Warehouse Cost Reduction in Supply Chain Management: 6 Building Blockshttps://globalriskcommunity.com/profiles/blogs/warehouse-cost-reduction-in-supply-chain-management-6-building-bl2021-02-24T10:26:19.000Z2021-02-24T10:26:19.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><div class="entry"><p><a href="{{#staticFileLink}}8591481276,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}8591481276,RESIZE_400x{{/staticFileLink}}" alt="8591481276?profile=RESIZE_400x" width="318" height="212" /></a>Cut-throat competition in industries has driven companies to find ways to reduce costs while increasing efficiency. To accomplish this, most companies have skillfully endeavored to streamline Sales, Operations Planning, Forecasting, Inventory Management, and Logistics.</p><p>One area that has still not grabbed industry’s attention is out-bound Supply Chain Managemen–from packaging to final delivery. Companies generally neglect Supply Chain simply because they do not consider it their core competency.</p><p>Significant Cost Reduction in the Supply Chain can be achieved by focusing on 2 main cost categories:</p><ol><li><span style="font-size:14pt;">Warehousing Costs</span></li><li><span style="font-size:14pt;">Transportation Costs</span></li></ol><p>Warehousing and Transportation represent a significant portion of the total Logistics costs. Implementing improvement programs, without any significant capital investments, can enable 20-50% cost saving in Warehousing, 40% in Transportation costs, flexibility, and better service.</p><p>Supply Chain Cost Reduction in Transportation and Warehousing has vast potential, not only in terms of costs, but also Process Improvement using Lean Six Sigma (LSS) techniques.</p><p>The approach to Supply Chain Cost Reduction in Warehousing encompasses 3 phases:</p><ol><li><span style="font-size:14pt;">Set the Baseline</span></li><li><span style="font-size:14pt;">Determine the Gap</span></li><li><span style="font-size:14pt;">Implement Lean Six Sigma (LSS) </span></li></ol><p>Meticulous and persistent application of Lean Management and Six Sigma techniques is at the core of reshaping Warehousing Operations and eradicating sources of waste, variability, and inflexibility. This article is an overview of the 6 building blocks used in Implementing Lean Six Sigma (LSS)—the 3<sup>rd</sup> phase of the approach to Supply Chain Cost Reduction in Warehousing:</p><ol><li><span style="font-size:14pt;">Business Processes</span></li><li><span style="font-size:14pt;">People</span></li><li><span style="font-size:14pt;">Performance Management</span></li><li><span style="font-size:14pt;">Third Party Interactions</span></li><li><span style="font-size:14pt;">Layout</span></li><li><span style="font-size:14pt;">Ownership</span></li></ol><p><a href="https://flevy.com/browse/flevypro/supply-chain-cost-reduction-warehousing-5475"><img class="aligncenter size-full wp-image-8607" src="https://flevy.com/blog/wp-content/uploads/2021/02/Slide-Deck-image-Supply-Chain-Cost-Red-Warehousing.png" alt="" width="735" height="552" /></a></p><p>Let us dive a little deeper into some of the building blocks.</p><h3><span style="font-size:14pt;"><strong>Business Processes</strong></span></h3><p>Business Processes present a huge opportunity for improvement by eliminating redundancies and sources of waste in Warehouse operations (e.g., unnecessary motion or double-handling in Manufacturing). Each source of waste represents extra costs and inflexibility that can be reduced or eliminated.</p><p><strong> </strong>Business Process Improvement can help reduce:</p><ul><li><span style="font-size:14pt;">Handling steps</span></li><li><span style="font-size:14pt;">Motion</span></li><li><span style="font-size:14pt;">Transportation</span></li><li><span style="font-size:14pt;">Space requirements</span></li><li><span style="font-size:14pt;">Effort</span></li><li><span style="font-size:14pt;">Time spent</span></li></ul><h3><span style="font-size:14pt;"><strong>People</strong></span></h3><p>This building block of Implementing Lean Six Sigma aims at avoiding overstaffing of full-time employees and at the same time maintaining a well-trained, efficient workforce.</p><p>Streamlining this building block leverages the following benefits to organizations:</p><ul><li><span style="font-size:14pt;">Refined Recruitment process reduces Employee Turnover.</span></li><li><span style="font-size:14pt;">Facilities can more closely match on-site staffing to demand by reducing notice periods.</span></li><li><span style="font-size:14pt;">Efficiency can be raised by about 15% through regular training.</span></li><li><span style="font-size:14pt;">Overstaffing of full-time employees can be avoided.</span></li><li><span style="font-size:14pt;">Productivity can be improved by 5-10% by focusing on appropriate facets of Performance during training.</span></li></ul><h3><span style="font-size:14pt;"><strong>Performance Management</strong></span></h3><p>This building block aims at using existing Performance Management levers to improve Employee Performance through morale boosting and awareness exercises. A laser-focus on the performance element helps the leadership achieve the following benefits:<strong> </strong></p><ul><li><span style="font-size:14pt;">Constant reminders and display of current performance give employees a sense of competition and drive.</span></li><li><span style="font-size:14pt;">Quick daily discussions highlight the significance of good performance and helps employees focus on essential aspects of their work.</span></li><li><span style="font-size:14pt;">Productivity is improved up to 20% by linking pay to performance.</span></li><li><span style="font-size:14pt;">Real-time feedback supports pay-related performance.</span></li><li><span style="font-size:14pt;">Measuring and rewarding the “softer” elements has long-term benefits.</span></li><li><span style="font-size:14pt;">Recognizing employee of the month can increase staff satisfaction.</span></li></ul><p>Given the existing industry cost and performance demands, wasteful or unpredictable Warehouse operations lose more than money. This can do rapid and permanent harm to a company’s reputation with customers since distribution is the logistical interface with the customer.</p><p>Improving Warehouse Operations is a significant area not only for Cost Reduction, but also a source of refining Customer Value Proposition.</p><p>Interested in learning more about <a href="https://flevy.com/browse/flevypro/supply-chain-cost-reduction-warehousing-5475">Supply Chain Cost Reduction in Warehousing</a> and Lean Six Sigma? You can download <a href="https://flevy.com/browse/flevypro/supply-chain-cost-reduction-warehousing-5475">an editable PowerPoint on <strong>Supply Chain Cost Reduction: Warehousing</strong> here </a>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>.</p><h3><span style="font-size:14pt;"><strong>Want to Achieve Excellence in Supply Chain Management (SCM)?</strong></span></h3><p>Gain the knowledge and develop the expertise to become an expert in Supply Chain Management (SCM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. <a href="https://flevy.com/browse/stream/supply-chain">Click here for full details.</a></p><p>Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities. It also captures the management of the flow of goods and services. </p><p>In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become. By April, many countries experienced declines of over 40% in domestic and international trade. </p><p>COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM. In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart. Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.</p><p><a href="https://flevy.com/browse/stream/supply-chain">Learn about our <strong>Supply Chain Management (SCM) Best Practice Frameworks</strong> here.</a></p><h3><span style="font-size:14pt;"><strong>Do You Find Value in This Framework?</strong></span></h3><p>You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</p><blockquote><p>“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</p><p>– Bill Branson, Founder at Strategic Business Architects</p></blockquote><blockquote><p>“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</p><p>– David Coloma, Consulting Area Manager at Cynertia Consulting</p></blockquote><blockquote><p>“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</p><p>– Roderick Cameron, Founding Partner at SGFE Ltd</p></blockquote></div></div>5 Critical Success Factors of Strategic Restructuringhttps://globalriskcommunity.com/profiles/blogs/5-critical-success-factors-of-strategic-restructuring2021-02-11T13:49:19.000Z2021-02-11T13:49:19.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><div class="entry"><p><a href="{{#staticFileLink}}8543198671,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}8543198671,RESIZE_400x{{/staticFileLink}}" alt="8543198671?profile=RESIZE_400x" width="318" height="212" /></a>Reorganization becomes essential at some stage in the lifecycle of any organization. In order to emerge triumphant through this tumultuous challenge, it is necessary that the focus remains on the challenges impeding the organization, thorough Strategic Planning to tackle the challenges, and prioritizing strategic initiatives to deliver effective Business Transformation. Strategic Restructuring has the capability to deliver these results.</p><p>When the word “Restructuring” pops up, the foremost idea that comes to mind is achieving Cost Reduction by minimizing payroll costs—predominantly by cutting back on the headcount.</p><p>Scores of organizations have suffered because, in the melee of headcount reduction, the most competent employees quickly found opportunities elsewhere, leaving inappropriately competent employees behind, resulting in a crippled organization.</p><p>The purpose of Restructuring is to make the organization profitable, efficient, and effective. Headcount reduction should be a consequence of the Restructuring initiative and not the prime objective.</p><p>To avoid an outcome that debilitates the organization as a result of Restructuring, it is absolutely essential to keep an eye on the Critical Success Factors (CSFs) while the organization moves through the 4 phases of Strategic Restructuring. Strategic Restructuring’s 5 CSFs include:</p><ol><li><span style="font-size:12pt;"><strong>Strategic Focus</strong></span></li><li><span style="font-size:12pt;"><strong>Continuous Communication</strong></span></li><li><span style="font-size:12pt;"><strong>Participative Focus</strong></span></li><li><span style="font-size:12pt;"><strong>Positions before People</strong></span></li><li><span style="font-size:12pt;"><strong>Focus on Competency</strong></span></li></ol><p><a href="https://flevy.com/browse/flevypro/strategic-restructuring-critical-success-factors-5389"><img class="aligncenter size-full wp-image-7693" src="https://flevy.com/blog/wp-content/uploads/2020/12/Slide-Deck-image-Strategic-Restructuring-Critical-Success-Factors.png" alt="" width="1002" height="752" /></a>Experts suggest envisioning a “Future State” for the organization, to be achieved through a robust Strategy that includes Change Management, implemented by the most competent employees who are redeployed. The rest of the employees either severe ties voluntarily or are laid off—ideally with a good severance package or a job placement, with the organization’s help, somewhere else.</p><p>Leadership has to ensure firm resolution in employing these <a href="https://flevy.com/business-toolkit/critical-success-factors">Critical Success Factors</a> in order to establish its role and build a constituency among employees who believe in the need for change. Let’s dig deeper into the 5 CSFs of Strategic Restructuring.</p><h3><strong>1. <span style="font-size:14pt;">Continuous Communication</span></strong></h3><ul><li><span style="font-size:12pt;">Communication is a decisive factor in Strategic Restructuring. Pitfall in this factor is the “need to know” approach. Top-level leadership should be communicating with the whole organization quite frequently.</span></li><li><span style="font-size:12pt;">Immediate and full disclosure of information builds trust in the management’s actions.</span></li><li><span style="font-size:12pt;">Repetition is key in getting the message across. Believing that enunciating once is enough, will be erroneous on the leadership’s part.</span></li></ul><h3><strong>2. <span style="font-size:14pt;">Participative Focus</span></strong></h3><ul><li><span style="font-size:12pt;">Redesign of structure is a bottoms-up job because the information and expertise are dispersed throughout the organization.</span></li><li><span style="font-size:12pt;">Employees in the thick of the action are in the best position to undertake this effort.</span></li><li><span style="font-size:12pt;">The management develops the organizational framework and keeps apprising the employees regarding the overall strategy in order to keep the direction true.</span></li><li><span style="font-size:12pt;">A participative approach to Restructuring assists in building employee morale and engagement levels</span>.</li></ul><p>Interested in learning more about the Restructuring’s <strong>Critical Success Factors</strong>, <strong>Transformation Phases</strong>, and a <strong>Case Study</strong> on Restructuring?” You can download <a href="https://flevy.com/browse/flevypro/strategic-restructuring-critical-success-factors-5389">an editable PowerPoint on <strong>Strategic Restructuring: Critical Success Factors</strong></a><u> </u>on the <a href="https://flevy.com/browse">Flevy documents marketplace</a>. </p></div><div class="entry"><h3><span style="font-size:14pt;"><strong>Want to Achieve Excellence in Business Transformation?</strong></span></h3><p>Gain the knowledge and develop the expertise to become an expert in Business Transformation. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. <a href="https://flevy.com/browse/stream/transformation">Click here for full details.</a></p><p>"If you don't transform your company, you're stuck." - Ursula Burns, Chairperson and CEO of VEON; former Chairperson and CEO of Xerox </p><p>Business Transformation is the process of fundamentally changing the systems, processes, people, and technology across an entire organization, business unit, or corporate function with the intention of achieving significant improvements in Revenue Growth, Cost Reduction, and/or Customer Satisfaction. </p><p>Transformation is pervasive across industries, particularly during times of disruption, as we are witnessing now as a result of COVID-19. However, despite how common these large scale efforts are, research shows that about 75% of these initiatives fail. </p><p>Leverage our frameworks to increase your chances of a successful Transformation by following best practices and avoiding failure-causing "Transformation Traps."</p><p><a href="https://flevy.com/browse/stream/transformation">Learn about our <strong>Business Transformation Best Practice Frameworks</strong> here.</a></p><h3><span style="font-size:14pt;"><strong>Do You Find Value in This Framework?</strong></span></h3><p>You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</p><blockquote><p>“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</p><p>– Bill Branson, Founder at Strategic Business Architects</p></blockquote><blockquote><p>“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</p><p>– David Coloma, Consulting Area Manager at Cynertia Consulting</p></blockquote><blockquote><p>“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</p><p>– Roderick Cameron, Founding Partner at SGFE Ltd</p></blockquote></div></div>Transportation Cost Reduction in Supply Chain Managementhttps://globalriskcommunity.com/profiles/blogs/transportation-cost-reduction-in-supply-chain-management2021-02-09T10:16:14.000Z2021-02-09T10:16:14.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><div class="entry"><p><a href="{{#staticFileLink}}8534714694,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}8534714694,RESIZE_400x{{/staticFileLink}}" alt="8534714694?profile=RESIZE_400x" width="323" height="215" /></a>Companies looking to improve efficiency and reduce costs can gain significant ground in the Supply Chain Management function by incorporating Lean Management and Six Sigma techniques.</p><p>Reason this area has gone under the radar is that companies do not consider Supply Chain to be their core competency.</p><p>Not only Warehousing but Transportation also has almost the same potential in terms of opportunities for <a href="https://flevy.com/business-toolkit/cost-reduction">Cost Reduction</a> and Process Improvement. The approach to Transportation Costs Reduction, though, is different to that of Supply Chain Cost Reduction in Warehousing. This is in part due to the complexity in Transportation Costs, as the costs come from numerous widely distributed individual operations every year.</p><p>The approach to Supply Chain Cost Reduction in Transportation encompasses 2 phases:</p><ol><li><span style="font-size:14pt;"><strong>Understand the Baseline</strong></span></li><li><span style="font-size:14pt;"><strong>Identify and Implement Opportunities</strong></span></li></ol><p><strong><a href="https://flevy.com/browse/flevypro/supply-chain-cost-reduction-transportation-5482"><img class="aligncenter size-full wp-image-8579" src="https://flevy.com/blog/wp-content/uploads/2021/02/Slide-Deck-image-Supply-Chain-Cost-Red-Transportation.png" alt="" width="753" height="564" /></a> </strong></p><p>Let us delve a little deeper into the 2 phases.</p><h3><span style="font-size:14pt;"><strong>1. </strong><strong>Understand the Baseline</strong></span></h3><p>Improvement in Transportation operations is hindered, in most cases, by enormous variability in operations, diverse service levels being demanded by various customers, and a multitude of transport providers delivering services in a variety of ways.</p><p>Transportation Costs of between 20-30% can be saved by compiling a complete perspective of the overall Transportation operations of an organization. The evaluation will also reveal essential service categories that have a skewed effect on Cost.</p><h3><span style="font-size:14pt;"><strong>2. Identify and Implement Opportunities</strong></span></h3><p>Identification of the Cost Drivers is imperative for the companies to develop a systematic approach to Transportation Cost Reduction. This systematic approach involves observing 4 main levers of <a href="https://flevy.com/business-toolkit/cost-optimization">Cost Optimization</a> opportunities:</p><ol><li><span style="font-size:12pt;">Compliance with Contracted Price</span></li><li><span style="font-size:12pt;">Negotiated Price</span></li><li><span style="font-size:12pt;">Contract Terms</span></li><li><span style="font-size:12pt;">Customer Breakpoints and Behavioral Changes</span></li></ol><p>The 4 levers of Cost Reductions help in countering the issues impacting Transportation Costs and enabling significant savings.</p><p>Significant Cost Reductions can be gained by identifying mutual benefits and risks for both companies and suppliers in addition to understanding customer breakpoints that enable Customer Centric Design.</p><p>Let us consider a few instances where Cost Reduction can have a quick impact.</p><ul><li><span style="font-size:12pt;">Companies, often, have to pay substantial fuel surcharges for waiting time or late payments—caused by variance in actual delivery patterns and the delivery pattern specified in the contract.</span></li><li><span style="font-size:12pt;">Suppliers usually charge a higher rate to compensate for inefficiencies in their operational structure. Understanding those inefficiencies helps identify significant savings potential.</span></li><li><span style="font-size:12pt;">Logistics Service Providers either increase their rates or add fuel surcharges in order to protect themselves from the effect of fluctuating fuel prices. A fixed rate benefits the customer when fuel prices go up, but creates needless high fuel bills when prices are down.</span></li><li><span style="font-size:12pt;">Ordering habits of certain customers add to the Transportation Costs. For example, unknowingly ordering early next-day deliveries, without an absolute necessity for it, causes significant (20% in some cases) extra cost than a delivery at noon. A 24-hour delivery time costs even less than the noon delivery.</span></li></ul><p>Interested in learning more about the phases and cost drivers of <a href="https://flevy.com/browse/flevypro/supply-chain-cost-reduction-transportation-5482">Supply Chain Cost Reduction in Transportation</a>? You can download an editable PowerPoint on <a href="https://flevy.com/browse/flevypro/supply-chain-cost-reduction-transportation-5482"><strong>Supply Chain Cost Reduction: Transportation</strong> here</a> on the Flevy documents marketplace.</p></div><div class="entry"><h3><span style="font-size:14pt;"><strong>Want to Achieve Excellence in Supply Chain Management (SCM)?</strong></span></h3><p>Gain the knowledge and develop the expertise to become an expert in Supply Chain Management (SCM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. <a href="https://flevy.com/browse/stream/supply-chain">Click here for full details.</a></p><p>Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities. It also captures the management of the flow of goods and services.</p><p>In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become. By April, many countries experienced declines of over 40% in domestic and international trade.</p><p>COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM. In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart. Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.</p><p><a href="https://flevy.com/browse/stream/supply-chain">Learn about our <strong>Supply Chain Management (SCM) Best Practice Frameworks</strong> here.</a></p><h3><span style="font-size:14pt;"><strong>Do You Find Value in This Framework?</strong></span></h3><p>You can download in-depth presentations on this and hundreds of similar business frameworks from the <a href="https://flevy.com/pro/library">FlevyPro Library</a>. <a href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:</p><blockquote><p>“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”</p><p>– Bill Branson, Founder at Strategic Business Architects</p></blockquote><blockquote><p>“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”</p><p>– David Coloma, Consulting Area Manager at Cynertia Consulting</p></blockquote><blockquote><p>“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”</p><p>– Roderick Cameron, Founding Partner at SGFE Ltd</p></blockquote></div></div>