Support Function Advantage

A global food company was overspending on inefficient support functions but skimping on high priority areas. Bain helped the company develop an end-to-end view of functional costs and a new strategy to align spending with business needs. The company’s size and complexity had pushed IT spending above its peer group, but R&D and marketing lagged. Poor visibility into overhead spending posed another challenge, as did the fact that dozens of manufacturing sites had their own P&Ls and HR staffs, missing the opportunity for scale efficiency. Bain and the company pursued a bold transformation strategy that reduced demand for IT services by rationalizing applications and business complexity/ refine customer segmentation and differentiate the company’s sales tactics; and set consistent policies around indirect spend categories. The end result was a new operating model that reduced overhead costs by 20% and headcount by 15%, identified an additional $500M in potential savings, and shifted more money to R&D, to fund new world-class innovation capabilities.