A leading regional cement company was looking to improve its cost management since they were dealing with very competitive players and their own internal resource efficiency was being low.
Context
The company was leading an organizational transformation process who’s goal was to become a more customer centric company as well as improving the competitiveness of the business
There was a low efficiency in terms of internal resource use
The budgeting procedures and mechanisms were deficient
Opportunities detected
The need to achieve a better efficiency of internal resources, and their distribution within the company, was clearly set as one of the team’s top opportunities
By the means of a zero-based budgeting exercise, an opportunity to relevantly decrease the expenses of the company was identified
Finally, there was a clear opportunity in being able to successfully install the zero-based budgeting tools, capacities, and philosophy within all areas of the company
Proposed actions
A multidimensional transformation was proposed, with focus on the following key aspects:
Cultural: a zero-based budgeting purpose message was developed and clearly transmitted throughout the organization
People and capacities: the company’s required people capacities were adjusted, training new talent as well as potentiating strong leaderships
Management model: the incentives systems was redesigned, and a new corporate governance system as implemented in order to enable the zero based budgeting transformation
Processes: the budgeting processes were adjusted, making them more standardized and robust
Tools: new tools were implemented, such as budgeting templates and systems
Results
Cost reductions of ~ USD 28 MM were achieved, equivalent to more than 25% of the company’s net profit
