Background and Challenge
The client, a $1.5 billion business, was experiencing a rising cost base due to increased finance and administration costs and headcount. Furthermore, there was an inefficient delivery of the services.
The client sought L.E.K.’s guidance to undertake an efficiency review of this cost base and to recommend improvement opportunities.
Approach and Recommendations
- Conducted an activity efficiency review of the client’s cost base and recommended an improvement program consisting of multiple initiatives across the finance and administration functions
- Proposed an organization restructure
- Reviewed the business’s portfolio and the support services operating model
- We evaluated the client’s organizational structure and determined that division by geography was a better structure than a division by business
- An optimal business portfolio development that delivers attractive returns was proposed, with quick wins’ exit of more than 30 loss-making and strategically non-aligned local operations
- We identified, through close work with the client, savings across a dispersed resource base as well as opportunities for improvement of fleet and labor and restructure of support services for greater efficiency
- Overall, we helped the client realize a significant potential savings of approximately 15% of the addressable cost base, excluding one-off working capital savings