Case Story: The €1.74 Billion “Cost-Saving” Disaster

The Challenge

What looks like a win on paper can hide a catastrophic loss in reality. A global retailer celebrated what seemed like a major operational and financial victory: by reformulating a key ingredient in one of its bestselling products, it had reduced transportation costs by a significant €42 million annually. The numbers under the logistics’ streetlight were clear and positive; on paper, it was a strategic masterstroke in efficiency. But then, almost overnight, the victory turned into a full-blown crisis. Sales for this once-beloved product didn’t just dip; they plummeted. Worse still, loyal customers seemed to abandon the brand altogether, impacting their entire shopping basket. The leadership team and stakeholders were at a complete loss to explain what had happened.

The Investigation Beyond the Streetlight

We understood that the conventional streetlight, focused only on cost savings, had blinded them to the true impact. Our challenge was to uncover the hidden, unintended consequences of their celebrated initiative. We deployed the Organisational CT Scan not just on the supply chain but on the entire ecosystem connecting the product to the customer: from the new ingredient formulation to its real-world performance, and, crucially, to the actual customer experience and their resulting “gut feeling.” We were seeking the “bad flora” that was silently poisoning their Customer Grove.

The Revelation

The Poisoned Product: The truth, once illuminated, was profound and directly traced back to the very change they had celebrated. The reformulated product, while cheaper to transport, was found to be 70% less efficient in its actual use by the customer compared to the original. It simply didn’t work as well as the old formula used to. This disastrous underperformance wasn’t just a minor issue; it was a fundamental breach of trust with their most loyal customers. Their organizational “normal” had become an unhealthy baseline that valued internal cost-cutting over customer reality.

The Verifiable Impact

The traced impact was catastrophic:

• €1.74 Billion in Lost Revenue: The initial saving of €42 million directly led to an astounding €1.74 billion in lost customer revenue.

• €840 Million Year-Over-Year Decline: Our diagnostic work was able to trace an €840 million year-over-year revenue decline directly back to this single, ill-considered SKU change.

Customers felt betrayed by the palpable drop in quality. They stayed away from the retailer altogether, punishing them for the unseen impact on product efficacy.

This case powerfully illustrates a key Maxim of the Maze: Your Comfortable Normal Might Be an Unseen Anchor; Quantify Its Real Cost.

In a complex ecosystem, an improvement in one isolated part can create disastrous, unintended consequences for the whole, especially when the customer’s reality is not part of the equation. By daring to look where others don’t, we can transform potentially devastating oversight into profound clarity and protect against immense value destruction.