Life Sciences
Case Study

£100 million
Savings over 3 years
Sales growth
Fastest growing in sector

Transformational global cost saving and efficiency programme

A Skarbek effect case study

A large global consumer products Healthcare company had been growing in the low single digits or flat, it was lagging its competitors. It set an objective of becoming the fastest growing company in its industry. This meant increasing top-line sales growth from +2% p.a. to +6-7% p.a. Advertising and Promotion support levels for the company’s brands had eroded over the previous years and Management agreed that for the objective to be realised much more competitive levels of Brand A&P support would be required and more money would be required to be spent on R&D, to bring more new high quality products to the market to help drive increased market shares.

Skarbek case study
The needs

The profit requirement from the parent company was not up for negotiation, so it was clear that the monies to boost A&P and R&D would have to come from within the company’s own cost structure. A global cost-saving and efficiency team was set up with the objective of saving £100m within 3 years (approx. 3% of sales and 6% of non A&P related costs). To ensure maximum impact and engagement across the organisation an experienced General Manager (now part of the Skarbek Associates team), who was also a member of the company’s senior Leadership Team, was appointed to lead the project, reporting directly to the CEO. It was communicated clearly that all savings made in an individual business could immediately be reinvested behind the brands of that business and that savings made in the supply chain would pass back, via a reduced cross-charge, to the Brands and Businesses as soon as they were realised.

How we helped

Critical to the success of the project was the allocation of sufficient dedicated people resource, both centrally and across regions and functions. A central Project Management team was set up to ensure this important strategy was well executed. Two Finance professionals were appointed at the centre to provide governance, analysis and monitoring support and dedicated individuals were appointed in the key functions of Supply Chain, R&D, Global Marketing, Procurement, IT, and Communications. Each of the three geographic Regions also appointed a dedicated representative to drive the project and achieve savings objectives. The project was structured as follows:

Design/Charter/Resources > Data gathering/Analysis/Interpretation > Planning/Execution design > Implementation/Score keeping

The design, charter and resources development was carried out by the Project team and included establishing clear Project goals, scope and boundaries, and obtaining Senior Management agreement to the Project timetable, resourcing, budgets and governance. The Data gathering analysis and interpretation was driven by the Project Finance team and included obtaining the required cost data for analysis and opportunity identification, coordinating any other on-going efficiency projects and understanding the cost and organisation structure, by function and region. This data analysis also involved gathering SKU and formulation data, by Brand. Planning and Execution design involved establishing the teams by function in order to identify saving opportunities, both low-hanging fruit such as SKU reduction and raw material and packaging standardisation and more complex challenges such as restructuring, 3rd party alliances, and process change. The Project team coordinated the work of all the various stakeholders to ensure agreed plans were implemented. They also ensured that the business was kept well informed of progress against targets.

The results

The target of saving £100m in three years was achieved and the project continued to deliver excellent results, eventually saving over £250m in six years. These savings were reinvested into increased A&P which rose by 3% of sales in the first three years, and more thereafter. Sales growth increased from +2% p.a. to over 6% p.a. and the company achieved its objective of becoming the fastest growing in its sector. Significant savings were achieved via a wide range of activities including; complexity reduction in raw materials, packaging components and manufacturing processes and significant waste was driven out via a much closer analysis of what actually was being spent. A greater awareness of cost avoidance and reduction was created within the organisation as was a determination to design in lower cost and simplicity at the early stages of New Product development.

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Thank you for the leadership training, it was really superb and we have already started to put it into action The talks were truly inspirational and we have discussed them many times already as we look for the key messages.
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Simon Pulsford

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Paul Heugh

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