The site had already cut a lot of cost, but still had to take out €10 million of structural cost to survive. A six-week study showed that €12.7 million was responsibly achievable: 27% more than the target. Within a year, the site itself had delivered €9.3 million, and the programme was still running.
Duration: Six-week study
“I already thought the target was more than challenging. So I hadn’t expected savings potential on this scale. The results we have already achieved show just how well-founded and realistic the proposal was. Closure is off the table.”- Business Unit Manager
The situation
Demand was shifting strongly to new product types, while demand for the established range fell sharply. The company responded by moving production to low-cost countries and improving direct labour productivity at the site.
The site had already cut a lot of cost, but still had to take out €10 million of structural cost to stay competitive. Without those savings, it faced closure.
What was really wrong
Until then, cost reductions had focused mainly on the direct organisation. The indirect organisation had received little attention. As a result, the balance between them had been lost. Axisto was asked to map the savings potential in the indirect organisation.
What we did together
A sharp vision as the starting point. Because the site faced major, far-reaching change, a comprehensive approach was needed. Together with the client’s team, we turned their deep knowledge of the market into a sharp new vision and a €10 million cost reduction target.
Built up from zero. Once the current activities and cost structure were properly understood, every activity was tested against the vision, with zero as the starting point rather than last year’s budget.
Designed the ideal set-up. Activities were combined, the organisation lost layers, and the work was organised into clear clusters along the entire order process.
Tested against reality. Even after applying practical constraints and business risks, the design largely held up.
What it delivered
- Structural cost reduction €12.7 million, substantiated, the target was €12.7 million
- €12.7 million was delivered by the site itself within one year, programme still running
The six-week study showed that €12.7 million of structural cost reduction was responsibly achievable: 27% more than the target. In the approved design, indirect FTEs fell by 47%, with a simpler, flatter organisation and self-managing teams along a redesigned end-to-end order process.
On top of that, there was a clear, compelling vision aligned with the changing market, and a site with a new outlook for the future.
What happened afterwards
The client developed the proposed organisation design further itself, drew up an implementation plan and carried it out. Just under a year after the study, €9.3 million of structural cost reduction had been delivered, and the programme was still running.
The closure plans are off the table. At this cost level the site is competitive again, and work is under way to introduce a new generation of products.
