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.

Why?

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.

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