Your culture can make cost savings last
What's the Issue?
Most cost reduction programs fail to sustain cost savings beyond the initial period of management focus.
Cost reduction programs that are run as one-time initiatives are destined to be repeated.
Consumer products companies put a lot of focus on strategic and tactical initiatives to change the operating model and search selling, general and administrative expenses (SG&A) for cost efficiencies. However, few consider the cultural shift that needs to occur within the organization to make the changes stick.
Turning an initial enterprise cost reduction program into a sustainable, ongoing function requires companies to:
- Establish a sustainable program governance structure
- Align performance management systems
- Transfer knowledge
Most importantly, it requires that companies embed a cost reduction culture into their business and people strategies.
Cost reduction programs that are run simply as one-time initiatives are destined to be repeated.