What is Cost Takeout Strategy and How to Do It the Right Way?

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What is Cost Takeout Strategy and How to Do It the Right Way? Cost takeout is often heard in C-Suite and boardroom discussions. Cost related decisions can make huge impact on the long term profit margins of any company. The primary objective of every leadership is to take out cost. To develop a cost takeout strategy, it is important for the leadership to first understand what a cost takeout strategy really is. Cost Takeout is a form of business transformation. It is a process that redesigns the fundamental elements of a business to the lowest cost structure that can support a company’s strategic objectives. It is the redeployment of resources to mission critical activities that can provide growth and differentiation, and align the organization to the new business design. Group50, a well-known consulting firm provides cost takeout consulting and have been helping businesses in reducing costs for many years and have generated double digit reductions in many projects they have completed. They use cost takeout methodologies that are based on a holistic assessment of the business model using business strategy as a guide. They include a deep dive into how technology is utilized and its cost to the business. Their consultants understand that taking cost out is easy but taking cost out without jeopardizing a business’s short and long term performance requires a systematic approach. 3-step process 

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Divide the business up into its key service, product and process elements and evaluate the cost effectiveness of each element via financial performance benchmarks and process analysis. Look at each element from the point of view of over 125 primary cost drivers. Identify the minimum cost to operate these elements and build upon the cost structure to support the business’s strategic needs.

The critical issue in front of senior leadership is to define the scope of a cost takeout strategy. The choices can run from focusing on a single business process or product, to a “Wall to Wall” cost takeout initiative that looks at every aspect of the business.


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