Reorganization and cost reduction
Production companies belonging to the one of our client's business areas faced a number of challenges. Our client's Management Board was alarmed by problems with profitability of particular products, especially in export. Non-optimal organizational structures, e.g. functions' duplication, also required a closer look. The Management Board had also doubts if the labor costs, energy and maintenance costs are at an appropriate level.
Together with our client we decided that in order to define ways of a lasting results improvement analyzing both the possibility to increase revenues and to cut costs would be necessary. We analyzed current strategic position of the companies as well as trends and market growth perspectives. It gave us the basis for recommending product portfolio optimization activities and target markets. During the project we identified the level of possible savings and actions necessary for their implementation. Based on analysis of the organization, processes and functions we came to a conclusion that changes in the organizational structure would be key in order to achieve cost reduction. We recommended a new organizational structure for the whole business area – creating one product division from manufacturing and support function companies and spinning-out general functions such as controlling, strategy, HR, PR to a corporate center. The developed organizational structure, which eliminated duplication of functions, enabled using existing purchasing and sales synergies and also made it possible to perform corporate functions efficiently. Additionally, we defined a target level of outsourcing of the manufacturing support functions and developed basic elements of operational excellence program. During work on particular project modules we identified actions (so called quick-wins) implementation of which led to fast and significant reduction in some cost groups already in the phase of preparing concept of changes.
The effects of proposed changes in the product portfolio, sales structure, organization and the level of costs were included in 5-year business plan.
Next, the developed concept was detailed in order to ensure that the implementation is efficient and includes all worked out elements. Implementation works were written out for particular groups of tasks, particular tasks and activities. What is more, we assigned the responsibilities and defined the deadlines. We also introduced tools monitoring the progress and planned activities connected with change communication. After the concept was detailed and accepted by the client's Management proposed changes were implemented by the client with our support.
The project made it possible for our client to improve its financial results thanks to a focus on profitable products and markets as well as significant cost reduction, mainly due to deep organizational changes.