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Engineering Company

Performance Improvement Programme


A worldwide engineering compay specialising in delivering customised solutions for niche markets had its eyes on a big prize: could it find cost savings of £40 million by reducing the materials bill for its products?

To help them find out, they enlisted the expertise of one of Novo Altum’s consultants. His strategy was to develop a product evaluation pilot scheme, to determine the extent to which costs could be optimised across the entire product range.

His analyses showed that cost reductions of 25%-65% were achievable, making the target saving of £40 million seem conservative. These findings would enable the company to plan the next stage of its cost rationalisation programme.

The Challenge

Identifying ways in which such massive cost savings could be made by reducing the materials bill across the company’s huge range of products and solutions would be no easy matter.

Novo Altum’s consultant knew that improving cost engineering in product design and development was key. He set about devising a framework to critically analyse the costs of selected products at the component stage – the results of which could then be extrapolated to determine the scale of cost savings achievable across the board.

The Solution

A series of pilot workshops was developed, in which the Novo Altum consultant and his team worked closely with the client’s engineers and designers to break down products into their component parts and conduct a thorough value to function analysis.

By costing out the function and customer value of each part, the team were able to eliminate or change components for comparable, more cost-effective options and reduce the overall materials bill for the product. The findings were then scaled up to define a realistic cost savings target for the whole business across all product lines.


With the completed analysis pointing to achievable cost reductions in the range of 25%-65% for the products tested, the outcome of the project designed by Novo Altum’s consultant was that the £40 million cost saving target across the company’s entire product range was actually likely to be an under-estimate.

The company is now planning the next stage of its cost rationalisation process and looking at ways to roll out the pilot scheme across all business lines.

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