Improve Competitive Advantage

Operations: screen regularly for cost reduction opportunities

Operational efficiency is essential for companies to remain competitive. A quantum leap in operational performance requires an assessment of the entire value chain. Consequently, a competitiveness plan is an excellent managerial tool to ensure that efforts across the company are focused on attaining the same objective.

Launching a competitiveness plan involves acting simultaneously on all the operational levers. These will, of course, vary according to the sector of activity. Examples include:

  • Research and Development: How can development cycles and costs be cut? How can prototyping costs be reduced? How can products be designed to ease the manufacturing and repair process?
  • Procurement: How to ensure that all levers are activated to cut costs and reduce volumes? How can the sourcing of products and services be optimized, while securing and including a manageable number of suppliers in the target panel? How can supplier performance be improved in the areas of Quality, Costs and Lead-Time? How can products and services be redesigned and re-specified to be cost-efficient?
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  • Manufacturing: How to improve the productivity of direct and indirect production teams and deploy a continuous improvement culture? How can non-value added activities be removed from material and information flows and waste reduced (Lean Manufacturing)? How can non-conformance costs be cut? How to increase availability of industrial assets while reducing maintenance costs? How can the make or buy mix be optimized?
  • Repair and after-sales: How can the Total Cost of Ownership (TCO) of products be cut? How can support and repair costs be reduced? How can products be designed to be less expensive to maintain? How can the interface between after-sales, production, and R&D be improved?
  • Supply Chain Planning: How can forecast accuracy be made more reliable in order to minimize uncertainty? How can schedules be optimized to maximize worker productivity and asset utilization while meeting customer specifications? How can subcontracting and overtime costs be cut? How can obsolescence costs be cut? How can the supply chain be optimized for products coming from low-cost countries?
  • Logistics: How can costs be cut from the distribution network while improving service levels? How can the productivity of operational teams be improved? How can logistics activities be rationalized? What needs to be outsourced? What needs to be in-sourced?
  • SG&A (Selling, General and Administrative): How can support services be sized to deliver optimal efficiency? How can support functions vary with the company’s activity to minimize fixed costs? How can indirect costs be cut without disrupting company operations? How can support functions be pooled via shared service centers?
  • Information Systems: How can rationalizing IT architecture and improving applications maintenance cut costs? How can business tasks be automated in order to reduce staffing requirements and focus the employees on their added value?
  • Finance: How to monitor the performance of the competitiveness plan?

 

A competitive improvement plan involves understanding all the levers applied to the operational value chain - from the suppliers to the end customer.

A competitiveness plan that focuses solely on processes and costs and does not take into account the workforce would be doomed to failure; we have elaborated 10 golden rules that ensure a plan’s success:

  1. Align top management with a clear and common objective
  2. Ensure success by allocating resources to the project
  3. Focus the project on achieving its objectives
  4. Never lose sight of the customer
  5. Optimize the range of levers that need to be activated
  6. Develop a cross-sectional vision by involving the different company functions
  7. Change behaviors in line with desired outcomes
  8. Assess social and organizational impacts
  9. Consistently maintain the effort over the long term
  10. Institutionalize the changes

Thanks to its expertise in all the functions concerned and its operational focus, Argon Consulting can help its customers with their operational efficiency plans.

 

 

 

We can provide support in the following ways:

In the diagnostic phase:

  • Identify and validate the levers that need to be activated
  • Facilitate the alignment of key players with the ideal processes, roles, and responsibilities
  • Set ambitious objectives and targets while ensuring they are accepted by the organization
  • Develop an action plan and the related management buy-in that ensures success

In the implementation phases:

  • Assist in creating a sense of organizational urgency
  • Lead the transformation program and benefits tracking to sustain the focus on results
  • Provide the expertise necessary to handle operational matters
  • Ensure appropriate action is taken to attain the target results and benefits
  • Support the human dimension of the transformation process

 

Case Studies

Product standardization by modular design
Development of a program to reduce stocks and cut logistics costs
Identify the paths of improvement of industrial performance for an automotive equipment supplier
Defining a makeorbuy and sourcing strategy for all clinical development processes
Various levers can still be activated to optimize costs and control the margin