Mastering Cost Optimisation Delivering an Effective Target Operating Model
Benefits of an Effective TOM
▪ Operational Efficiency: Streamlined processes can lead to 20-30% cost reductions
▪ Service Delivery: Enhances prompt and efficient services, improving delivery times of up to 25%
▪ Cost Savings: Optimising resources and eliminating waste can save £M’s annually
▪ Agility: Adapt quickly to market changes, increase revenue growth and profits of upwards of 30% ▪ Risk Management: Clear processes reduce compliance and operational risks in the region of up to 50%.
Common Mistakes made
▪ Unclear Objectives: Leads to misalignment with the business strategy
▪ Ignoring Employee Input: Results in poor adoption and execution
▪ Overcomplicating It: Creates difficult to manage processes and services
▪ Neglecting Technology: Misses out on efficiency gains
▪ Inadequate Measurement: Lacks KPI’s and regular adjustments.
Key strategies for TOM design
▪ Set Strategic Objectives: Define long term goals
▪ Analyse the Current State: Identify strengths and weaknesses
▪ Customer Centricity: Design with the customer in mind
▪ Leverage Tech: Drive efficiency with digital tools
▪ Engage Employees: Involve for better insights
▪ Adopt Agile Practices: Ensure flexibility and continuous improvement.
How – To - Guide
1. Define Objectives: Document strategic goals
2. Analyse the Current State: Conduct SWAT analysis
3. Design Future State: Map the desired outcomes
4. Develop Roadmap: Plan with timelines and milestones
5. Engage Stakeholders: Involve key players
6. Implement & Monitor: Roll out in phases, adjust as needed
7. Measure Success: Use KPIs to track effectiveness.
▪ Assess current state, defining Objectives & Goals ▪ Shape outline TOM [location & transition strategy] ▪ Develop business case
Visualise
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Design the TOM
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Establish high performance culture Identify innovation opportunities Drive continuous improvement
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Design service delivery processes
Enhance
Blueprint
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Develop process frameworks Devise Implementation roadmap
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TOM Framework
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Mobilise resources
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Set up infrastructure and technology
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Monitor and stabilise operations Deploy service delivery frameworks
Build
Review
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Redesign processes Hire into key roles
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Formalise as new business entity
Run
▪ Allocate resources and or ramp up hiring ▪ Capture and transfer knowledge ▪ Execute agreed transformation projects
Case Study: Global Consumer Goods company
Background: A leading consumer goods company aimed to enhance efficiency and reduce costs through an optimised TOM Implementation: ▪ Phase 1: Streamlined supply chain processes and integrated advanced analytics ▪ Phase 2: Implemented Digital transformation strategy, including automation and IoT ▪ Phase 3: Focussed on continuous improvement and employee engagement to drive adoption
Outcomes: ▪ 20% reduction in operational costs ▪ 15% increase in productivity ▪ $1.2 Bn in cost savings over 4 years
We can help with your business transformation, please get in touch today
theteam@projectone.com
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