Your business needs

In almost any business planning process, there needs to be a mechanism that offsets margin erosion – and if it is not revenue growth or portfolio expansion, then it has to be cost reduction. Most of the STC (Short Term Controllable) costs are associated with the manufacturing unit cost, which is almost exclusively the organisational focus. Once the low-hanging fruit has been harvested it becomes increasingly difficult with every year that passes to identify and implement additional measures that will have a significant effect on lowering the unit cost. Even when actions are identified, they still need to have timely, effective and sustainable implementation in order to impact the current and future financial period(s).

The only way to guarantee that this business goal is met is to set up an annual program that is resourced, planned and executed via a proven process whereby projects and their delivered savings are tracked both in $ and time until they become visible in the GL.

If your productivity activities are predominantly opportunistic in nature and with often a ‘hard-to-predict’ effect on the P&L statement, then read about how R&G helps get clients organized around the subject of identifying and delivering (manufacturing) cost productivity year after year with program savings that you can bank on!

Our answer

Manufacturing Variable cost is a consequence of both process design and process execution. The long-hanging fruits are generally plucked by implementing simple solutions to execution issues, while process design issues are more structural, and there the focus is generally on equipment design/operation. While this can yield significant savings, it can be expensive and require capital investment. R&G first analyses the process to ascertain exactly where and, more ascertain exactly where and, more importantly, why the cost is incurred. Very often we find poor process control and unnecessary variation at the source. Eliminate this and the cost evaporates. Manufacturing Fixed cost on the other hand is almost exclusively generated by execution problems and by the need to handle these on a day-to-day issue-by-issue basis – in fact, managing the chaos. Structural solutions reduce cost. Firefighting adds cost, and need for this must be eliminated.

Our solutions