Want sustainable cost reduction? Know your culture.

Your culture can make cost savings last

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Our Global Consumer Products Center recently commissioned a survey to understand how volatile economic and demographic environments are consumer products companies.

Less than a third of companies think they're very good at increasing efficiency.

Here’s what we learned:

  • 74% think they need to make significant changes to their business model to sustain historic margin levels.
  • 51% cite greater cost of controls, and 47% cite efficiency improvements as the top areas of activity to deliver the majority of margin improvements.
  • Fewer than 33% say that their company is very good at increasing efficiency or productivity.

Maintaining profit margins demands that companies constantly focus on cost and efficiency. And yet, despite years of effort, many companies have found that ordering 10% cuts across the enterprise without considering the differences in impact those costs may have on individual functions or cost centers hasn’t worked.

A more strategic approach that lines up cost efforts to the company’s broader business goals can help make better decisions that reduce costs and improve business performance.

But to get cost savings to last, companies need to look at their improvements through a cultural lens. They need to make sure they are putting into place cost reduction programs that are right for the company and its employees.

Our series, 5: insights for executives, explores the questions:


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