Building materials manufacturer: Cost-driver analysis
Building materials manufacturer: A major building materials manufacturer was caught in a down cycle and asked Oliver Wyman to help improve earnings through cost-cutting and optimized capital deployment. We helped boost efficiency in three steps: Analysis of fixed costs, cost drivers, cost structures, and processes that tied up working capital; quantification of savings potentials; and staggered savings plans. The ambitious top-down targets set at the beginning of the program were over-fulfilled by 40% for cost reduction and by 100% for working capital. Over three years, we helped the client reduce corporate overhead, sales costs, and production costs. The working capital reduction was achieved by a significant reduction of supplies and an increase in accounts payable.
