Cost Leadership: Key Principles of Operational Excellence

July 31, 2021by Faber Infinite

Today’s market is dynamic and highly competitive for several industries such as Pharmaceuticals, Automotive, Engineering, FMCG, and others. Cost pressures already existing, with pandemic, demand-supply imbalance and turbulent supply chains, it has impacted overall conversion or manufacturing costs leading to more burden on finances of the company. The cost of the raw materials has been increasing dramatically leading to erosion in margins. in this article, we will discuss about key principles of Operational Excellence.

Any organization wishing to put up healthy profitability in these highly competitive markets would like to have an added advantage to gain a better position in the market with either more sales or lower costs. 

Multiple cost drivers which directly impact the businesses and the overall costs could be attributed to material, labor, equipment performance, yield, energy, and many more. Progressive industry leaders are always on a drive for cost optimization which enable them cost leadership with competitive advantage of penetrating in the market. With changing times, this effort needs to be accelerated as well to keep up with the times. 

It is a complex situation to drive holistic cost optimization, and not create optimized islands of cost savings that either doesn’t impact the overall system costs or impact adversely. Team Faber Infinite has successfully executed several integrated projects for driving cost leadership and making clients more competitive.

At one such client location, more than 52 projects were rolled out across the organization for driving cost leadership and assisted the organization to achieve cost optimization across all the key functions saving more than INR 3 crores (30 Million).

The client teams along with consultants initiated the transformation initiatives to implement a cost optimization framework across various departments of the organization, and later deploying it horizontally across all the units of the organization. 

Key Principles of Operational Excellence
  • Designing a flexible & agile workflow system to accommodate demand variations and meeting Customer Delivery Dates
  • Trimming the manufacturing and conversion costs via focused improvement projects
  • Material cost reduction through 5 key cost drivers including strategic sourcing, inventory management, and others
  • Also, by reducing throughput time at key-value stream levels to ensure improved On-Time Delivery performances and reducing LD charges or Opportunity Costs

Faber Infinite’s consultants have knowledge and experience in cost optimization methods for different sectors of industries. With several projects and assisting organizations across the globe to build cost leadership, team Faber claims to be an apt partner for your journey as well. Contact us to start & accelerate your cost optimization journey at [email protected].

Written & Compiled by Faber Nency & Faber Mayuri

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    by Faber Infinite

    Faber Infinite is an International Business Management Consulting Organization offering consulting solutions and services for Increase Profitability in Business.

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    GET IN TOUCHSocial links
    Taking seamless key performance indicators offline to maximise the long tail.

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