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Global cost-cutting project case study 

A leading multinational engaged KPMG member firms as advisers on a highly complex global cost-cutting project after an independent benchmarking study revealed that their finance costs were 30 percent higher than average.

Since then, KPMG firms have helped this group to achieve more than €100 million in savings, reducing financial and administrative costs and improving processes at the same time. We have also helped them simplify their complex organisational structure, significantly reducing the number of companies in the global group.

 

The brief

Reducing costs by 100 million euro

The brief from the client was to help cut their administrative costs by 100 million euro, improving the performance of their corporate functions and establishing processes to industry best practice standards. We responded with a multi-disciplinary approach that drew heavily on our firms' ability to work closely together and combine functions and skills.

 

Some of the key ingredients in our project approach were:

  • Extensive program management — to encourage savings and ensure the project's success.
  • Evaluation of financial processes — we screened the client's finance processes to identify potential savings and ways in which the processes could be improved.
  • Development of business plan — we developed business cases and roadmaps for the identified sub-projects and measures.
  • Pilot accounting processes — our firms implemented pilot projects all over the world focusing on industry best practices and opportunities to achieve additional savings. So far KPMG firms have run pilots in Brazil, Japan, Italy, U.K., Netherlands and Belgium. We are due to go to the U.S., Canada, France and Spain. In each case, KPMG were able to finalise reporting within just one week.

 

The solution

The client's structure and finance processes were compared with our firms' experiences; assumptions were defined and the saving potential was calculated. Total savings of 100 million euro included, for example reducing the Shared Service Center cost by 10 million euro or simplifying and accelerating the planning processes — a saving of 5 million euro.

 

We also generated a list of companies that could be merged, setting out a clear action plan and roadmap — a saving of more than 10 million euro. Additionally, we were able to identify further savings on top of the 100 million euro target by reducing management levels and an additional reduction of further legal entities in the group.

 

A challenging role for Jörg and his team

One of the key players in the project was Engagement Manager Jörg from KPMG in Germany. He was responsible for managing the project and expectations of the client, leading a multi-disciplinary team of about 25 people. Jörg joined KPMG in 2001 after gaining comprehensive management experience in a medium-sized construction company managing their IPO in 1998.

 

Since then he's advised on a number of complex, international projects for multinationals. This project enabled him to put his project management and client relationship skills to good use and also developed his experience in international cost-cutting and value creation projects.

 

Supporting Jörg, the managers on the team each took responsibility for specific projects — preparing workshops, comparing client processes with industry best practice in the area they were focusing on and working with the client teams to help improve the financial processes. Each manager was fully responsible for the results of their project.

 

Younger professionals on the team performed different analyses of costs and headcount, for instance providing breakdowns for different regions and countries or by process and sub-process. They also prepared the slides and presentations of their findings.

 

Results

One of the most satisfying outcomes of the project has been the way it has changed the client's perception of KPMG firms and professionals. They now see KPMG as their global finance advisor. Clearly hitting and bettering the brief to save 100 million euro played a big part in this. But we also helped them simplify their complex organisational structure, an outcome that should bring benefits for years to come.

 

"Every improvement and every saving we have achieved in this project was hard-won", says Jörg. "In many cases the changes we have recommended cannot be implemented overnight. They will have to be introduced over time but this is good for us and our relationship with the client. Another exciting aspect is that KPMG firms have a well-established track record and we will be able to support other clients with this cost-cutting approach."

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