The Smart Segmentation Imperative
3:00 - 4:00 pm CEST
Quick-Wins by Smart Segmentation
Reduce spend, streamline supply networks, and prepare for recovery at high speed
Rapid tactical action is crucial
The extreme dynamics of the Covid-19 crisis, in which supply and demand shocks are combined with massive psychological and political effects, make it necessary to stop non-essential expenditures quickly and radically and to consistently exploit the possible one-off effects. To meet this challenge, procurement must shift the focus and give top priority to short-term measures – while balancing out the need to safeguard the supply base.
The Quick-Win focus requires a program based on classic cost reduction methods and a portfolio of digital solutions. Instruments of game theory, redesigned contract structures and pricing processes, industry-specific adaptation and use of automated benchmarking and AI-empowered data analytics are components.
Thus, significant savings can be achieved in only 12 weeks. Depending on industry and company, these savings range between 3 and 6 percent at category level.
May 19, 2020 | 3:00 - 4:00 pm CEST
Based on realized Quick-Wins programs, cost transformations in the company can be achieved not only in the short term, but also in the medium term. The decisive factor here is a holistic perspective of the levers that have an impact on cost reduction without being exhausted in the traditional price-quantity interplay. At Roland Berger, we firmly believe in the formula Needs x Specs x Quantity x Price = Maximized savings. This is the indispensable fundament for sustainable cost reduction decisions and a fast and resounding impact on financial performance.
In a life-threatening crisis, quick and significant cost savings act like a desperately needed medicine. But good medicine is characterized by the fact that it does not irreparably deplete the body in order to cure the acute illness. Roland Berger therefore relies on what we call "Smart Segmentation", an approach that allows a profound and holistic analysis of supply structures, commodities, and industry specifics. Dedicated strategies are to be derived for different suppliers so that not only obvious but also hidden cost-cutting potential can be exploited. However, Smart Segmentation also means striving for a general optimum instead of a local maximum.
Therefore, we rely on Quick-Win programs that consider multiple tradeoff relationships. These include risks arising from the destabilization of critical suppliers, possible limitation of assets relevant in the future, or the balancing between one-time effects and medium-term cost reduction opportunities. By handling this balance individually, the respective industry and specifics regarding suppliers, procurement markets and organizational maturity can be addressed accordingly.
Quick-Win programs are an indispensable building block for securing the viability of companies – if we implement them smartly.
Join our 40 minutes global live webinar
- Overview of crisis response playing field
- The Quick-Wins Approach by Roland Berger
- Lessons learned and achieved value-add from international projects
- How to implement our approach in your company
Your Roland Berger Operations Team
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