Complete Cost Reduction Examples that include Mission, Discovery, and result.

1. Three Real World Examples
of Cost Reduction Success
Stories
Free Content Provided By - T and T LLC

2. Engagement #1
The mission was to understand why Plant Mangers at a large company were not
meeting profit margin.
Step #1 – Look for trends to develop a hypothesis
Location
Type of business
Years in business
Customer
….ETC
In this step I was able to assess that the plants were showing severe profit degradation in the second year of
production and this was more pervasive among more complicated work. I hypothesized that the predicted profit
model was faulty and the first full your of production was the first real opportunity for it to show.
Step#2 – Test the Hypothesis
 I did ground up estimates by hand and tried to reconcile them to what was going on in the plants.
Success -
What I discovered was a 30% EBIT error in the estimating software. The Plant Managers were doing great
when you consider the burden they started with.

3. Engagement #2
The mission was to evaluate a large sub-assembly line for cost reduction
opportunities.
Step #1 – Evaluate the lines (their were two lines side by side)
Measured time for assembly of the whole line
Measured time for sub-assemblies (looked for reprocessing opportunities)
Showed up early, late, and counted cars in the parking lot.
In this step I caught the plant running without the counters on. In other words they were claiming a slower run time
than they were experiencing. I found two robot assemblies that could be replaced by a man. The man being 10X
faster than the robot. Lastly, I determined that the plant had half the manpower it was reporting and was making
their production by keeping the counters turned off.
Step#2 – Presented my findings
 Presented my findings to the Plant Manager and was immediately kicked out of the plant.
 Presented my findings to the Buyers.
Success -
Over night, a large manpower reduction was proposed by the supplier as a savings to us all.

4. Engagement #3
The mission was to help build a Program Management group to handle new
business in a company.
Step #1 – I always do a money walk through in a new company. I literally write a dollar sign on a sticky note and
walk it through the system. (Sounds silly doesn’t it)
While doing this I made two disturbing discoveries
1. Any person in the company could arrange for a check to go to an imaginary company, Invoice it, and get it
paid. Then they could remove the paper trail because none of the paperwork was locked up.
2. I found a stack of papers in a corner unattended. It was over 11M in rejected invoices from the various
customers.
Step#2 – Presented my findings
 Showed the paper trail issue to the VP and everything was locked down that day.
 I compiled the rejected invoices in an Excel file and started reporting aged accounts with peoples names
attached.
Success -
The security issues over paper work were secured and the aged accounts were cleared up in a little
over three months.

5. If you have any questions or need help utilizing this tool please contact
me.
Tom Turner
- Owner T and T LLC
Website- TomTurner.BIZ
Email-TomTurner@TomTurner.biz
Phone - (586) 484-2908

6. If you have any questions or need help utilizing this tool please contact
me.
Tom Turner
- Owner T and T LLC
Website- TomTurner.BIZ
Email-TomTurner@TomTurner.biz
Phone - (586) 484-2908