FP supports Saudi industrial groups with driving Sustainable Cost Reduction
To remain competitive, organizations are continually looking for ways to optimize costs and eliminate organizational waste. By applying its Sustainable Cost Reduction (SCR) approach, management consultancy FP has helped two major Saudi organizations improve efficiency while strengthening their long-term capabilities.
Many organizations – particularly those facing financial pressure – typically rely on traditional cost-cutting measures, such as identifying areas of waste or even reducing headcount. While these strategies can deliver short-term savings, they often come at the expense of an organization’s long-term capabilities and competitive advantage.
FP’s Sustainable Cost Reduction approach addresses this trade-off head-on, enabling organizations to achieve rapid cost savings while preserving – and ultimately strengthening – the capabilities needed for sustainable, long-term growth.
Operational makeover for a commodity converter
In the first turnaround case, FP partnered with a commodity converter in Saudi Arabia that was struggling in a highly price-competitive market. The company faced complex production inefficiencies, missed deliveries, and a long cash conversion cycle due to a lack of operational maturity. To address these challenges, FP ran an end-to-end value stream analysis focusing on the main profit-generating product family to connect operational activities directly to financial impact.
During the initial cost reduction phase, a factory pilot program successfully increased productivity in key work centres by over 50%. Simultaneously, an inventory reduction program was executed that lowered excess stock by over 60% and reduced accounts receivable by 17% within the first three months. This rapid progress generated the liquidity needed to self-finance deeper operational changes.
In the process re-engineering phase, further adjustments decreased material usage by between 3% and 6% per output unit while driving throughput improvements of between 30% and 90%. By resetting master data in the enterprise resource planning system, the organization automated pricing matrices and bills of materials to track costs accurately and win competitive bids.
Internal teams were trained throughout the rollout to ensure a continuous improvement capability was left behind.
Transformation for a construction manufacturer
The second turnaround case involved a manufacturer in the construction industry that was losing bids because of uncompetitive costs and inflexible capacity constraints. The business could not meet project deadlines with its existing throughput levels. FP conducted an end-to-end value stream analysis to identify the specific inefficiencies and quantify how they impacted unit costs and delivery capabilities.
By implementing FP’s Sustainable Cost Reduction approach, the manufacturer expanded its manufacturing throughput by 82% without adding any extra resources, allowing it to meet delivery commitments and secure revenue. It also achieved a 49% reduction in inventory, which brought essential liquidity back into the business.
Subsequent design re-engineering reduced unit costs by 32% on key product lines, which ultimately boosted overall productivity by 131% and enabled profitable contract wins. In addition, automation in procurement enhanced delivery adherence and lowered costs. To sustain these achievements, FP installed transparent performance measurement indicators within a company-wide daily management system.
Overcoming resource constraints
Both cases demonstrate how industrial organizations can navigate crises without resorting to traditional, damaging cost-cutting measures like reducing headcount. Instead of creating a less capable organization, the Sustainable Cost Reduction approach eliminates waste to self-fund improvements.
By combining operational excellence with digital enablement, companies build long-term competitiveness. Advanced tools, such as low-code applications and agentic AI, allow organizations to automate legacy workflows in a fraction of the traditional time, turning operational pressure into permanent performance.
“FP’s experience across industries in Saudi Arabia and beyond shows there is an alternative to cost cutting,” says James Ryan, Partner at FP. “Waste is the true driver of inefficiency and therefore the only sustainable lever for improvement. A crisis creates a unique window for transformation as urgency replaces resistance and forces organizations to act.”
