Discover how BCG helped IBM improve productivity, reduce complexity, and liberate significant resources to invest in long-term growth and innovation.
BCG’s Approach to Cost Management
Our cost management experts implement customized, industry-specific cost-transformation programs. We evaluate how companies can reduce or eliminate costs across the board—in overhead, supply chain, manufacturing or store footprint, and beyond—and reinvest those savings to capture new market opportunities and growth.
Our holistic cost-optimization approach helps you redefine your cost structure, unlock value to fund growth, and sustain long-term performance.
Creating Leaner, Faster, and Stronger Companies
Unlike one-dimensional cost reduction or restructuring plans, our approach to cost advantage yields long-term agility, efficiency, speed, and value.
- Leaner. We enable leaders to do more with less. Applying our decades of expertise, we identify where and how to reduce costs, convert fixed costs to variable costs, and improve efficiency. We then rigorously prioritize cost reduction initiatives based on ROI to ensure that clients capture maximum value. Our advanced AI, digital, and technology capabilities make cost reductions stick—all underpinned by our industry leading change management approach.
- Faster. Our battle-tested cost strategy accelerates speed to value by establishing empowered, proactive program leadership that drives a consistent operational tempo across an enterprise. Bureaucratic roadblocks are replaced with rigorous governance and accountability, facilitating timely and thorough execution to accelerate cost reduction. We also ensure that changes are owned by line management and engage an organization to help it stick.
- Stronger. Strengthening an enterprise through effective cost management is fundamentally about change management. Our experts help build a culture that embraces a methodical approach to cost reduction—one that is deliberate, not sluggish—to ensure that these savings become a lasting part of your daily operations.
Applying the Full Range of Capabilities
We bring extensive expertise to support holistic cost transformations, including the following:
- Zero-Based Budgeting. More than deploying one-time cost-reduction strategies, our approach to zero-based budgeting uses facts to decide how to liberate resources and make smart choices about where to allocate them. We anchor this approach in a culture of cost consciousness.
- Operational Excellence. Holistic value-chain transformation enhances service and quality, reduces costs, and mitigates risks—boosting efficiency and effectiveness.
- AI and Technology Cost Optimization. We help clients harness the power of traditional and generative AI to capitalize on near-term cost management opportunities while building productivity across functions. We also help them transform their IT functions into world-class, cost-efficient, technology functions that are strategic partners and digital business enablers. This means building up digital capabilities and increasing efficiency and simplification, across the board.
- Organization Design. A successful cost management program requires changing the organizational context in which employees perform to be more efficient and effective.
- Pricing and Revenue Management. By transforming pricing, companies can drive significant value to the bottom line by transforming their pricing strategy and optimizing their marketing spend. We help clients build the capabilities, processes, and mindsets that unlock the power of their pricing and marketing functions—in both good times and bad.
Creating Value Rapidly
Strategic cost management requires unlocking short- and long-term savings while achieving context-specific business goals. Although the scope of actions and the timelines differ depending on the situation, our three-step approach delivers both speed and value:
- Provide a roadmap for taking out costs (4–6 weeks). We size cost-reduction opportunities that align with our clients’ overarching strategic goals and establish initiatives to realize value.
- Capture near-term wins and design long-term initiatives (12–18 weeks). We help our clients realize real value quickly and lay the groundwork for longer-term cost-transformation initiatives.
- Implement longer-term wins (6–12 months). To promote sustained value, we launch cost-transformation initiatives tied to long-term strategic goals and establish processes to ensure continuous cost management.
Our Clients’ Success in Cost Management
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September 9, 2024
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November 15, 2024
Discover how RHI Magnesita, in collaboration with BCG, is revolutionizing its global production network, unlocking unparalleled efficiency, cost savings, and operational breakthroughs.
Video
October 29, 2024
Germany’s third largest utility worked with BCG on a cost transformation that resulted in efficiency gains of 300 million euros. EnBW SVP Wolfgang Eckert explains.
Video
September 9, 2024
BCG helped IBM improve productivity, reduce complexity, and liberate significant resources to invest in long-term growth and innovation.
IBM's Chairman and CEO Arvind Krishna and Senior Vice President of Transformation and Operations Joanne Wright, along with BCG's Vikas Taneja, explain how.
IBM's Chairman and CEO Arvind Krishna and Senior Vice President of Transformation and Operations Joanne Wright, along with BCG's Vikas Taneja, explain how.
Discover how BCG used a cascaded and holistic organization-design approach to help a global biotech firm reduce its gross labor and non-labor costs by 20%.
A powerful cost transformation saved a global beverage giant $310M and unlocked $1.1B for future opportunities. Here's how.
BCG’s Cost-Management Tools and Solutions
Our cost management experts deploy BCG’s robust suite of proprietary tools and solutions to help clients become leaner, faster, and stronger. We bring a customized portfolio to each client based on their industry and specific needs. These solutions include, but are not limited to, the following:
Compass Performance Benchmarking
Our database solution enables companies to understand how they compare against best-in-class leaders and unlock competitive advantage in operational costs.
Compass Performance Benchmarking
KEY Impact Management by BCG X
Our cost-management approach incorporates our portfolio and program-management software—which has delivered more than $100 billion in client impact—to accelerate value creation and manage complexity through every phase of the cost-optimization journey.
KEY Impact Management by BCG X
OrgBuilder by BCG X
Our patented software platform provides a single source of truth for facilitating the organizational transformation and change management required for successful cost transformations.
OrgBuilder by BCG X
Explore Our Cost Management Insights
Article
January 31, 2025
Cost management takes center stage as executives navigate uncertainty and seek growth in 2025.
Article
November 18, 2024
BCG research reveals what sets a select group of leaders apart. Here's how to join them.
