In the summer of 2020, the Japanese global market leader for flat glass production commissioned the interim manager to significantly reduce costs in the company's 16 largest production plants in Europe. The aim was to identify potential savings of at least a low single-digit million amount per year.
Client demands: no cost reduction according to the lawnmower principle
However, the client attached great importance to reducing costs according to the "lawnmower principle", but rather to realizing savings through intelligent ideas and solutions for each individual plant. This is why the project title was "SMART COSTING" - and there was no blanket target for each company. As project manager, the interim manager led an international team of four employees and a steering committee of three managers.
Cost-benefit analysis prepared and discussed for each location
The travel and contact restrictions in the wake of the coronavirus pandemic posed a particular challenge in this mandate (August 2020 to July 2021). If at all possible, the interim manager visited the production sites (e.g. in Belgium, France, Germany, Spain, Italy, etc.) twice a week. He was unable to visit the production sites in the Czech Republic and Russia - here, contact was limited to online meetings.
The interim manager chose McKinsey's "overhead cost value analysis" as the methodology for the cost reduction concept, which he knew well from his professional experience as a management consultant. He presented the results in each production plant, usually to plant managers, production controlling and the heads of administration, maintenance and purchasing.
This was followed by individual discussions and workshops in which a wide range of cost optimization measures were identified. In addition to site-specific adjustments, there were also inputs that are now being applied in other companies where appropriate.
Best practices: centralized purchasing, shared services and outsourcing
As a best practice, the interim manager initiated centralized purchasing for goods and services that are needed equally at all locations. He also suggested transferring personnel from Finance and HR to a "Shared Services Center". The reduction of maintenance to the legal minimum as well as outsourcing and automation of plant security are further cost-cutting measures that are now being adapted for all locations.
Potential savings exceed the client's expectations
In the end, the savings proposed by the interim manager and his team amounted to a mid-single-digit million amount. This significantly exceeded the client's expectations. All the more so when, one year after the project, it turned out that the savings actually realized were significantly higher.
Although a cost-cutting project is not a popular project per se among employees, cooperation within the team was excellent throughout the entire project. This applied at all levels: between the project manager and the steering committee, between the project manager and the core team, within the core team itself and between the project manager and the employees at the production sites.
