Our Top-Ten Steps to Cost Reduction Projects

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Cost reduction consulting is more an art form that involves a solid understanding of the process of change management.  Along those lines, here is our top-ten list for ensuring a successful cost reduction effort.

  1. Obtain senior-level commitment.  Without the CEO’s backing, don’t waste your time!  That means that CEO needs to actively communicate interest, support and willingness to commit resources to the effort.
  2. Establish a sense of need and urgency.  The CEO needs to establish the “burning platform” issue.  This should be easy to communicate as in, “your job depends on the health and survivability of this company”.
  3. Create a guiding coalition.  This is a cross functional team of managers headed up by a project sponsor who would be their direct manager.  One thing to keep in mind when forming up this team, you want people on the team that don’t have the time to be on it, not those who do.
  4. Develop a shared vision and strategy.  This is a subtle but an important first step in establishing a “touch stone” against which all resulting improvement opportunities will be measured against.  If a recommendation doesn’t fit in with the shared vision and strategy, don’t waste too much time with it.
  5. Communicate the change vision.  It is important to establish a project communication program early on.  If the project leadership doesn’t communicate where they are headed, how can anyone down the line be expected to follow?
  6. Empower employees for broad based action.  The team must be empowered to be able to take broad based action.  If the project team doesn’t believe they have the power to change the status quo, they won’t.
  7. Generate short-term wins.  Quick Hits are the key to overcoming initial project inertia.  Find lots of Quick Hits and implement the low hanging fruit quickly.  Nothing breeds success like early success.
  8. Consolidate gains and procure more change.  Once momentum is achieved through lots of Quick Hits early on, the project team will be psyched up.  Now is the time to undertake the more challenging projects that will result in greater paybacks.  Go for it!
  9. Anchor new approaches in the culture.  Once most of the project results have been achieved, don’t stop now.  Keep the project teams intact and focused.  You have a chance to keep it going and anchor change management into the culture.
  10. Hire the right consultant to guide the process.  Although this may seem self-serving, there is much to be said for having an independent professional driving this type of process.  For one thing, a consultant will bring fresh ideas and a willingness to challenge “sacred cows”.  And, there is much cost to be wrung out of those cows!  In addition, change management is something that requires a good deal of neutral meeting facilitation skills.  And, it’s always easier to challenge the status quo when you know you’re leaving after a project is over.

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Follow this link for a detailed description of our Fast Track Approach to Cost Reduction Projects: FTG-Approach-to-Cost-Reduction or call us on 917-267-7685.

 

Richard T. Azar, CPA

Managing Member

The Fast Track Group, LLC

(p) 917-267-7685

razar@TheFastTrackGroup.com

www.TheFastTrackGroup.com

 

© 2016, The Fast Track Group, LLC