Cost reduction and productivity improvement | Deloitte Switzerland | Manufacturing | Analysis has been added to your bookmarks.
Cost reduction and productivity improvement
Although Swiss manufacturers responded superbly to the global financial crisis and recession of 2008/09 and have initiated comprehensive programmes to cushion the strong Swiss franc, there still remains a need to improve productivity in light of ongoing economic volatility and uncertainty.
- Cost reduction
- Lean production
- Optimisation of procurement
- Offshoring/Nearshoring potential
Optimisation and reduction of costs remains a key issue for Swiss manufacturers of all sizes. This is primarily a matter of cost transparency and understanding where the real cost drivers lie. The focus is on back-office processes, where cost-reduction potential exists. Operational and non-operational areas are equally in focus. Centralisations (shared services centres) will become even more important. Cost reductions for manufacturing companies will increasingly become the core strategy to survive global (location) competition.
Various lean production concepts (such as elimination of waste, needs-oriented / just-in-time production or integrated supply chains) will also be a high priority for Swiss manufacturers in the future. These concepts will continue to offer significant savings potential to make production even more efficient and productive. Lean concepts are applicable not only to the production process, but also to other business areas (lean management, lean administration, lean development, lean maintenance, etc.).
Swiss manufacturers should to focus on transparency and efficiency in their supply chain. Internal measures (e.g. bundling of suppliers, improving planning, improving specifications) should be given higher priority than external ones (e.g. negotiations with suppliers). Moreover, expansion of global procurement using low-cost country (LCC) sourcing harbours significant potential for further reducing costs and increasing competitiveness.
Optimisation of procurement
In the past, offshoring was considered to be a strategic course of action whereby a company could differentiate itself. Now, offshoring has been adapted more broadly and is now an operational necessity. Nearshoring (e.g. in Eastern Europe) is increasingly coming into focus for Swiss manufacturers as a more attractive alternative to keep certain parts of the value chain (especially R&D) in Switzerland.
Offshoring / Nearshoring potential
By international standards, Swiss manufacturers have been less aggressive when it comes to outsourcing. Because of sustained cost pressure, outsourcing will have to be considered even more seriously in the future, as a potential source of strengths. The focus of outsourcing resides on services with low value added (e.g. facility management, cleaning services). Areas like IT, payroll services and HR, as well as maintenance, warehousing and logistics should increasingly be examined with respect to their strategic importance. In addition, the outsourcing of assembly services, component manufacturing or entire segments of production should be considered.