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Home > Features > Case Studies
A cost-reduction program at Formica Corporation leaned on project management expertise to save millions of dollars while invigorating a skeptical corporate culture. But the emphasis was on improving processes, not shutting plants. Most important, the transformation didn't end with the project.
Formica Corporation’s new CEO is weighing the benefits of the company’s 2003 North American Cost Reduction Program in more than just dollars and cents. Frank Riddick instituted a restructuring of Formica’s North American manufacturing supply chain, distribution network and product mix in early 2003. Within ten months of the start of the program, Formica had realized $7.5 million in annualized savings. In December 2003 alone, the company saved $500,000 in period expenses versus the previous year. And additional cost-savings and profits are expected in 2005 and beyond, says Riddick.
Charged by the corporation’s board of directors to improve performance and attract new capital, Riddick’s management approach from day one has been "cost reduction by improvement" rather than a singular drive to cut costs by any means. "Yes, the program has saved Formica millions," Riddick says. "But more importantly, it has resulted in better utilization of assets, better performance in the marketplace, and better operational control.
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