Interviewer view · keep this screen to yourself
Finding EUR 10 million of savings
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
A car-parts maker in the Czech Republic has total costs of EUR 100 million a year: materials EUR 60 million, labor EUR 30 million, and overhead EUR 10 million. The owner wants EUR 10 million of yearly savings within two years without hurting quality. The table below shows each cost bucket and what benchmarks suggest. Where would you find it?
The prompt refers to Exhibit 1. After reading it, say: "Open Exhibit 1 now."
Format note: Interviewer-led: the interviewer shows the cost table and asks whether overhead alone can reach the target, then for the savings by bucket, then for the one-time cost.
2. Answers to clarifying questions
Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.
If asked: Is the target a yearly saving or a total?
Answer: A yearly saving, fully in place by year two.
If asked: Are there limits, such as no plant closures?
Answer: No closures; quality and delivery must not suffer.
If asked: What do benchmarks suggest?
Answer: Similar plants pay about 8 percent less for materials and have about 10 percent lower labor cost.
3. The hypothesis a strong candidate states
Listen for an early, testable guess like this one. It does not need to match word for word.
Materials are 60 percent of cost, so my hypothesis is that most of the saving must come from materials, with labor second, and that overhead alone cannot reach the target.
4. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- Savings by bucket versus the EUR 10 million target
- Key: Materials: price, quantity, specification
- Labor: automation and shift planning
- Overhead: zero-based budgeting
- One-time costs and quality checks
Exhibit 1
The prompt uses this exhibit, so the candidate opens it right after you read the prompt ("Show exhibit 1" on their screen).
| Cost bucket | Cost (EUR m a year) | Benchmark gap or possible cut (%) |
|---|---|---|
| Materials | 60 | 8 |
| Labor | 30 | 10 |
| Overhead | 10 | 20 |
So-what
Materials are 60 percent of cost, so even a modest cut there is worth more than a deep cut in overhead.
5. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Can overhead alone do it?
What a strong candidate does: Even a deep 20 percent cut in overhead saves only EUR 2 million, a fifth of the target.
Overhead saving (EUR): 10,000,000 × 0.2 = 2,000,000
Step 2: Materials
What a strong candidate does: Close the 8 percent gap to similar plants through supplier tenders and simpler specifications.
Materials saving (EUR): 60,000,000 × 0.08 = 4,800,000
Step 3: Labor
What a strong candidate does: Close the 10 percent gap through automation of two manual steps and better shift planning.
Labor saving (EUR): 30,000,000 × 0.1 = 3,000,000
Step 4: Add it up
What a strong candidate does: Materials plus labor plus overhead.
Total saving (EUR): 4,800,000 + 3,000,000 + 2,000,000 = 9,800,000
Step 5: One-time cost
What a strong candidate does: Interviewer: "The labor saving needs about EUR 6 million of one-time spending on machines and severance; the materials and overhead savings need little upfront spending."
Payback on labor saving (years): 6,000,000 ÷ 3,000,000 = 2
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
The target is reachable, but only with materials at the center. First, an 8 percent materials saving gives EUR 4.8 million and needs little upfront spending, so start there. Second, a 10 percent labor saving gives EUR 3 million but needs about EUR 6 million of one-time spending, paid back in about two years. Third, a 20 percent overhead cut gives EUR 2 million, bringing the total to EUR 9.8 million, close to the EUR 10 million target; the last EUR 0.2 million needs only about a third of a point more off materials (0.2 of 60 is about 0.3 percent), for example from lower scrap. Check every specification change with the quality team before it goes ahead.
Risks a strong answer names: Suppliers may resist price cuts or cut service; Specification changes could hurt quality if not tested.
Next steps: Run tenders on the ten largest purchased items; Plan the automation project and its timeline.
Strong versus weak
A strong answer
Sized the buckets, used benchmarks per bucket, added the savings up against the target, and counted the one-time cost.
A weak answer
Proposed cutting travel and office costs, which are tiny, and never showed a path to EUR 10 million.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
Total
0 out of 25
Score all five criteria to see the band and the feedback template.