Companies across all industries have faced a huge growth in complexity in recent years. This has arisen in multiple areas such as product portfolio, customer portfolio, production, distribution, administration and processes. Our clients tell us that their customers are often unwilling to pay for the unknown costs of complexity, and their employees can no longer cope with the fragmented and confused workload and processes.
This leads to a lack of focus and a loss of motivation. Nobody can adequately quantify these inefficiencies, but all agree that they need to be addressed. In the current crisis the case for change is strong, and there is a very good opportunity to prevail in the crisis by considering these issues now.
A T Kearney's complexity management solution uniquely brings transparency to complexity costs across the whole value chain - something our clients never had before and which our competitors cannot produce. We calculate the complexity cost on the basis of activities related to categories such as products, customers, technologies and market segments. This is enabled by our Multi Cube complexity model, which presents master and transactional data across the entire value chain.
The model is enriched by quantitative and qualitative strategic values for the various business elements, derived from market analyses and management interviews. Our approach balances the complexity cost and strategic value, distinguishing good complexity from bad in order to identify the right set of complexity optimisation measures.
Using this process, clients can at last identify intelligent measures across the value chain which can significantly improve their EBIT. The typical range of improvement potential is 2-5% EBIT increase, depending on the client's specific situation and industry. This significant improvement is clustered in four major levers:
- Operations optimisation (site, line or warehouse closures)
- Material costs reduction
- Service productivity gains (non-production overhead reductions)
- Top-line improvement (repricing, margin containment, switching)
Business risks within management decisions are reduced significantly by this transparency. Understanding the domino effects across the value chain can provoke the structural changes necessary to achieve sustainable benefits.
To find out how to become a leader in complexity management, please visit our Complexity Management website at www.mycomplexity.com.
For more information on how we can help you, please contact us at
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