MATERIAL COST REDUCTION
Material Cost Reduction at H&Z combines deep sourcing expertise, product understanding and robust commercial execution to achieve sustainable savings across both direct and indirect spend. Our structured approach analyses cost drivers, identifies value opportunities and delivers measurable impact through targeted implementation. With decades of experience across industries, we help organisations reduce complexity, strengthen supplier relationships and secure long-term cost competitiveness.
Material Costs Define Profitability
In many organisations, material spend represents the largest share of total costs. Price volatility, supply constraints and increasing sustainability requirements put pressure on procurement and engineering teams alike.
Effective Material Cost Reduction requires a coordinated, fact-based and cross-functional approach that improves cost, performance and resilience at the same time.
Our methodology ensures sustainable results for both direct and indirect materials, from raw materials and components to services, logistics and non-production categories.
A Three-Phase Method for Real Savings
Analysis and Cost Transparency
We create a detailed fact base across direct and indirect materials, including cost structure analysis, market and supplier benchmarks, volume, complexity and performance requirements. This transparency reveals structural cost drivers and improvement levers.
Value Creation Plan
Based on the analysis, we develop a focused value creation plan that outlines categories, measures, savings potential and implementation paths. This includes supplier strategies, alternative materials, optimisation concepts, consolidation opportunities and risk scenarios.
Implementation and Realisation
We work side-by-side with procurement, operations and engineering to execute the plan. This includes supplier negotiations, technical redesign, consolidation measures, contractual improvements and the establishment of routines that secure long-term impact.
End-to-End Material Cost Reduction Expertise
Cost Structure & Market Analysis
Deep insight into cost drivers, supplier economics and alternative sourcing strategies.
Category Strategy Development
Strategies for direct and indirect materials, tailored to market dynamics and company priorities.
Supplier Engagement & Negotiation
Targeted discussions supported by fact-based arguments and clear value scenarios.
Technical & Design Optimisation
Collaboration with engineering to adjust specifications and improve manufacturability.
Risk & Resilience Measures
Actions to reduce exposure to volatility and ensure long-term supply stability.
Implementation & Realisation Support
Hands-on execution to ensure savings are realised and embedded.
DIRECT MATERIALS: COST WHERE IT COUNTS
Direct material cost is shaped by specifications, design decisions, supply strategies and market dynamics. The strongest levers often sit upstream in design and specification choices, closely linked to Cost Value Engineering.
Our work covers:
• cost structure analysis and should cost modelling
• supplier consolidation and negotiation strategies
• material substitution and alternative specifications
• redesign and manufacturability improvements with engineering
• risk and volatility management for critical commodities
This combination of technical insight and commercial execution delivers measurable saving
INDIRECT PROCUREMENT: VALUE BEYOND MATERIALS
Indirect categories often suffer from low transparency, fragmented demand and inconsistent ways of working. A structured approach brings order to spend, improves supplier performance and tightens service levels.
Key categories include logistics, facilities, energy, IT services, MRO and professional services.
Levers include:
• demand and specification optimisation
• contract and supplier performance analysis
• benchmarking and market testing
• process and utilisation improvements
• consolidation across business units
The result is lower cost, better delivery and stronger alignment with business needs.
Empowering Client Success
We help clients achieve significant and sustainable reductions in both direct and indirect material costs. Our work strengthens supplier performance, enhances transparency and aligns procurement, engineering and operations around clear value objectives. The result is measurable savings, improved resilience and long-term competitiveness across the entire supply chain.
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Your Partners in Material Cost Reduction
If you want to improve cost performance across your direct or indirect materials, our experts are ready to support you. Get in touch to discuss where the greatest opportunities lie.
