Cost Optimization is known as taking out cost is easy. However, companies that seek to balance material, sustainable cost reductions with broader strategic goals have a far more complex challenge on their hands. Addressing short-term cost-out imperatives, while ensuring your company maintains the core capabilities it needs to support strategic goals and compete in the marketplace, is a delicate act.
Often the most obvious places to look for savings directly conflict with strategic considerations, and there may be limits to how much savings you can extract. In addition, it is often difficult to challenge your organization to consider potential opportunities because the fact base for key cost levers is not documented. Or your senior team may believe there is no room for improvement, while remaining oblivious to best practices in the industry or analogous sectors.
Furthermore, achieving the most effective and sustainable cost transformations, generally requires complex solutions, such as material organizational or process redesigns, not to mention capital investment and senior leadership time. As a result, the payback period, or simply the reluctance to change, becomes a stumbling block.