Wage War on Complexity Costs
The Opportunity
Complexity costs are the single biggest determinant of your cost competitiveness. In fact, attacking complexity can often lead to a 15-30% reduction of costs in significant portions of your business. Complexity—process, product & organizational complexity—creeps into companies, inflating cost structures to non-competitive levels and creating a sprawling portfolio of products and services that are not only difficult to deliver, but also confusing to customers. Below are a few examples of how we adapt the concept of complexity to serve our clients:
Complexity Diagnostic, using Square Root Costing
You think you have a “complexity problem” but you can’t quantify the opportunity. Read more
We partner with you to help answer key questions such as:
- Does my company have a complexity problem?
- What is the extent of the issue – and the cost of complexity?
- What are the key opportunities: what’s my Complexity Agenda? What is the size of the prize for eliminating complexity?
- How do I get started?
We leverage unique methodologies, such as Square Root Costing, within a hypotheses-driven approach to identify, clarify and quantify the Complexity Agenda for your organization.
Reshape your Cost Structure
Your costs are non-competitive or have risen sharply over the last few years. You’ve grown significantly, but have seen little of the expected scale benefit. Read more
Instead, your company suffers from high levels of complexity. If this is your situation, we can partner with you, using our innovative costing approaches, to answer key questions such as:
- What are my “true” costs, and how different are they from standard costs?
- What is the impact of complexity on my cost structure?
- What are the key levers for cost transformation?
Optimize your Product & Service Portfolio
Your product or service portfolio is cluttered and expansive; customers struggle to make sense of it, and your company struggles to deliver on it. Read more
In our experience, while many companies attempt SKU and portfolio rationalization, few achieve their goals due to a flawed and incomplete methodology. We can work with you to determine:
- What is the profit opportunity from portfolio optimization?
- What are the opportunities for product substitutability, to neutralize revenue risk?
- What is the right way to execute a SKU rationalization?
- How do you keep complexity at bay?
We integrate market, operations, and financial perspectives to address these questions—to find the requisite variety for your portfolio.
Smart Customization
You would like to capture the benefits of localization, while maintaining economies of scale. What’s the 80/20 approach to customization in a market where the one-size-fits-all model is becoming obsolete? Read more
- What is the right mix between standardization and localization/customization?
- What characteristics define unique product or category clusters?
- What are the right clusters and what is the benefit of migrating to them?
- How do we operationalize our clustering strategy without risk to the supply chain?
In our work, we’ve found that complexity is the enemy of scale. Clusters need to be defined at the right level – granular enough to capture real differentiation, but simple enough that they can be executed without impeding the supply chain.
Case Studies
Read about our client experience in this area:
