NEW YORK (TheStreet) -- To combat pesky inflation and intense price competition in the aisles of Walmart (WMT) and Target (TGT), major consumer products companies are finding ingenious ways to save money in their operations. The cost savings are starting to really add up.
Often branded with a geeky corporate title, the money saved from restructuring programs are being reinvested into improved marketing messages and packaging, as well as developing new innovations. Take for instance General Mills' (GIS) "Holistic Margin Management", or HMM, initiative. According to a May 14 blog post by General Mill's Public Relations Manager Bridget Christensen, this program is "one of General Mills' strategies to offset rising input costs." In fiscal year 2015 alone, this program "is targeting more than $400 million in cost of goods sold" savings noted General Mills Executive Vice President and CFO Donald Mulligan on the company's most recent earnings call. By 2020, General Mills is expecting to realize $4 billion in costs savings from HMM.
The key to bringing these lower costs to life? It starts, per Christenson's blog post, by "understanding the drivers of value in our business and to eliminate non-value added costs and activities." Some of the more creative actions by General Mills include: using 10 pasta shapes in Hamburger Helper as opposed to 20, reducing the size of several Helper packages by 20% while keeping the same amount of product in each box, and installing "scoop showers" in over 250 Haagen-Dazs stores to save water and money. "Scoop showers" are designed to maintain ice cream scooper cleanliness without running water for an extended period. All told, the annual savings from this scoop shower maneuver: $1 million.