Background and Challenge
A large, approximately $5.0 billion SOE engaged L.E.K. to undertake a diagnostic of its indirect cost base and to develop a transformation program to drive efficiency.
Approach and Recommendations
The overall objective of our engagement was to develop robust evidence of substantiated cost-out potential, and to translate this into a large suite of implementation-ready initiatives.
We leveraged its cost reduction experience, using a range of bespoke opportunity identification tools and methods, to rapidly identify and size functional and cross-functional cost reduction opportunities.
An in-depth understanding of functional challenges and cross-functional workflows meant we could effectively identify the root cause of cost escalation and the design solutions addressing the underlying issue (often in functions other than the one where cost was recorded).
A key dimension to the project was the hands-on coaching of management and initiative owners — both in analyzing the cost base and operations to find opportunities, and in change planning and execution.
Results
- Our review identified cost reduction opportunities totaling over 20% for most functions, which means a total approximately 20% of the addressable cost base was identified, underpinned by a robust evidence base
- We also provided the client with a comprehensive, prioritized and coordinated implementation plan to realize the savings
- Management and initiative owners were coached to drive execution
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