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Tata Strategic identified cost reduction opportunities in the areas of transportation (through competitive negotiations), clearing and handling (by modifying the payment structure), and inventories (by redesigning the scheduling process). Tata Strategic also identified opportunities to de-bottleneck capacities at nodes through process redesign and route optimization. Tata Strategic negotiated with several potential third party logistics service providers who could manage end-to-end logistics activities.

Tata Strategic’s recommendations enabled the client achieve overall cost reduction of about 30 per cent while also reducing capacity requirements of warehouses. Other fixed costs were expected to reduce by about 40 per cent. The client achieved a 5 per cent cost reduction by implementing some of the recommendations even before the study was completed.

Tata Strategic studied all elements of the cost structure except the cost of raw milk. The focus was on key elements of operational costs such as manpower, logistics and conversion. Manpower cost was studied using levers such as benchmarking, outsourcing and zero basing. Almost 30 per cent surplus manpower was identified using these levers. In logistics, the contracted rates for transport of milk from DCs to the chilling stations were re-evaluated. Inter-union milk movement was redesigned using optimization software. A potential to reduce logistics costs by 15 per cent was identified. Savings on conversion costs were identified through levers such as process redesign and fuel change. A potential to save 5 per cent of conversion costs was identified. Savings were also identified through the rationalization of inventories, a change in the distribution structure and improved cash management.

The study enabled the client identify and exploit ideas to reduce overall operational costs by over 20 per cent.

Tata Strategic used a unit cost reduction method based on extensive internal and external benchmarks to optimize costs. The methodology ensured ‘dedicated’ client participation and sign-offs on implementable ideas at all senior levels in the client organization. A robust tracking and monitoring mechanism was instituted to ensure systematic implementation and savings accruals to the client.

Savings worth 15 per cent of the addressable cost base have been syndicated. Currently, Tata Strategic is assisting the client to implement and institutionalize an ‘internal’ continuous improvement program.

Tata Strategic conducted a cost base analysis covering cost waterfall isolating key cost drivers. Several cost reduction levers including commercial and structural levers were applied to identify potential to reduce costs. A logistics procurement strategy was devised and implementation of recommendations (negotiations with vendors) in a few pilot locations was facilitated.

The client was able to reduce costs on secondary freight by about 18 per cent following the exercise

One of India’s largest automobile manufacturing companies was losing its competitive edge due to high material costs and total cost of ownership. Integrated cost reduction, through a “cross-functional” approach, effectively amplifies the effect of cost, quality and time savings by concentrating on individual areas. This concept involves a simultaneous focus on the product, and the value chain that creates it.