Case Study:  Organizational Assessment and Redesign - Automotive Industry

Conducted an assessment of Automotive OEM’s cost engineering organization and developed recommendations for redesign

Situation and Objective

  • EMEA COO was not satisfied with recent financial performance

  • Missed vehicle profitability targets were attributed to avoidable cost overruns at the vehicle program level

  • It was suspected that the Cost Engineering organization was not robust and lacked the processes, tools, skills, and organizational structure necessary to:

  1. Facilitate timely and accurate cost estimates

  2. Proactively manage, and drive down, vehicle costs

Approach

  • Follow three steps that focus on the re-design of the Cost Engineering function to maximize its effectiveness throughout the vehicle lifecycle:

  1. Conduct As-Is Assessment & Gather Best Practices

  2. Identify Gaps to Best Practices and Gap Closure Actions

  3. Define High-Level Future State Process Design andGap Closure Roadmap

  • Assess and benchmark activities in four primary areas: processes, tools, skills, and organization structure

Results and benefits

  • Delivered a detailed assessment of Cost Engineering organization highlighting gaps to competitor best practices

  • Identified fundamental, supporting, and sustaining actions (based on expected benefits and difficulty of implementation) to ensure appropriate focus going forward

  • Developed “Seven Principles of Cost Engineering” to guide all current and future improvement actions

  • Successful implementation of the recommendations will facilitate a robusttarget cost setting process, increase the speed and accuracy of cost estimates, and most importantly, enable leadership to make more informed decisions to effectively manage the business