Upstream Advisory I Performance
Upstream Advisory I Performance

Operational Expense Benefits

Change Better. We support companies to structurally improve their business…

Today a lot of companies are struggling to realize operating expense benefits. What are you doing to realize operational expense benefits? In general, start with key performance indicators and monitor performance with visual management. Based on our experience, we share a structured approach how to realize operating expense benefits. 

Suppliers


Improve net working capital. Minimize inventory and re-negotiate your terms and conditions with suppliers (e.g. price, payment term, logistics and freight expense, bonus).



Cost


  • Improve capex planning - predictive maintanance and expansion. Align capex with requirements “fit for purpose”. Business Case max. 2 years payback period. As such projects with an IRR < 45% should not be considered


  • Operating expense - time and money. Operational expense should be a percentage of latest estimated sales. 


Please take into account 20% unexpected costs

 


Benefit


  • Safety - please apply a real assessment of the risk, being likelihood x impact


  • Improve processes . Where you can simplify the way of working; reduce number of process steps and people involved.


  • Improve Plant Utilisation


  • Increase Productivity - focus on organisational agility, resource effectiveness (materials, people and time) and minimize waste (non value added activities). 


 

  • Improve Capacity Management


  • FTE (time) - improve throughput time.


  • Variable cost - energy, raw materials


  • Non Product Related Expense - limit NPR expense



Improve Employee of the Month


Establish a monthly contest with a fun factor to generate new expense reductions. Select the winner, implement the winning idea and reinvest the savings into the organization.  



Illustration


A picture says more than 1.000 words. A video is worth 30k pictures, but an experience is worth much more. In case you are interested in value creation end to end, see below.


…with our head in the sky and feet in the mud

Upstream Advisory I Performance

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