Ask any European manufacturing executive today, and you’ll hear the same refrain: “We’ve done everything we can, so why are we still chasing margins?” It’s important to understand that this isn’t just “leadership fatigue.” It’s a symptom of deeper, structural challenges that remain unresolved. Of course, that’s easier said than done, especially in today’s global business environment.
In this article, we’ll uncover five of the most common and most costly profit leaks plaguing the modern manufacturing plant. More importantly, we’ll explore some practical steps leaders are taking to fix them while avoiding disruption, downsizing, and delays.
In 2025, manufacturers face pressure on multiple fronts. For starters, energy prices in Europe remain two to four times higher than in other regions, even after some recent signs of stabilisation. Skilled labour is still in short supply, with companies across the EU reporting persistent gaps in maintenance, production, and engineering roles. This fact continues to slow down operations in economies of all sizes and types.
Meanwhile, global trade disruptions like tariffs and redirected supply chains continue to compress margins across sectors . BMW is a perfect example of this. The German automotive leader recently projected that it will incur a €1 billion hit this year due to rising costs tied to trade policy shifts, particularly tariffs imposed by the United States.
Of course, it’s not just the external climate causing pain. Here at TBM Consulting Group, we work with manufacturers who’ve already taken many of the recommended steps to improve their strategic position. They’ve implemented Lean. They’ve digitised their workflows. They’ve centralised their supply chains. But despite the maturity of their operations, we continue to uncover hidden cost drains that are quietly bleeding their profitability.
Most businesses seek to create a high-performing operation, as this has the power to streamline profitability and maximise their competitive advantage. But despite their efforts, more and more companies are seeing their profits eroded by a wide range of issues. These are the sorts of problems that don’t show up on performance dashboards or in monthly reviews, which can make them difficult to identify. They aren’t technical failures or supply chain disruptions.
While they may seem minor on their own, collectively, they can cost millions. This is because they are mostly structural and behavioural issues embedded in how people work, how accountability is shared, and where leaders focus their attention—issues that fall squarely within the domain of operational leadership. Without any further ado, here are the five of the most common (and most costly) plant performance leaks we’re seeing in 2025.
Nearly every manufacturer tracks receivables. But tracking isn’t the same as collecting. In a lot of cases, we’ve found that the money is just sitting there, unclaimed. When you account for overdue balances, ageing credits, or rebates that have never been enforced, the total can sometimes add up to hundreds of thousands of euros. All these eat away at your cash flow and diminish your working capital. Too many firms allow this issue to sit at the “margins of accountability.” By assigning clear ownership and creating cross-functional visibility, they can turn forgotten credits back into profit.
Many supplier and customer agreements are years old. As a result, they are often completely misaligned with current cost structures and market realities. Past freight terms, surcharge clauses, and indexation mechanisms may have made sense five years ago, but in today’s volatile markets, they’re dragging margins down.
Many commercial teams are hesitant to challenge long-standing agreements, especially in key accounts or critical supplier relationships. But this hesitation comes at a cost, sometimes a surprisingly steep one. Manufacturers can protect their margins by revisiting outdated terms with fresh commercial analysis and clear cross-functional support without sacrificing well-established relationships.
We’ve found that duplicate roles are extremely common in multi-site or multi-country operations. For instance, a firm might have multiple engineering teams quoting the same product, separate scheduling groups making conflicting plans or customer support duplicated across markets. This causes what we call “functional drift,” a sort of confusion over who owns what. The end result? Hundreds of wasted hours and misaligned decisions.
Keep in mind that this isn’t about layoffs but eliminating waste and clarifying accountability. One industrial client reduced duplicate planning activities across three sites to generate a yearly savings of €1.2 million. They simply needed to centralise coordination and realign responsibilities. The key isn’t micromanaging every expense but applying periodic scrutiny to the “small” categories that quietly become material over time.
One of the most surprising consistencies we’ve seen is how certain P&L categories rarely get reviewed in detail. Prime examples include things like internal freight, packaging, facility services, and indirect labour. This doesn’t happen because these are insignificant, but because they’ve become background noise; “the way we’ve always done it.”.
This is where hidden costs can really start to add up. Over time, contract terms grow stale, standard rates aren’t re-benchmarked, and new vendors stop being considered. And what was once marginal becomes material.
In one case, we uncovered a packaging supplier that hadn’t been rebid in six years. After benchmarking with similar clients, the team renegotiated the terms, resulting in a 15% cost reduction with no change in quality or service. Operational excellence services are often crucial in identifying these overlooked expenses and driving cost-effective decisions.
For manufacturers handling custom or engineer-to-order products, quoting can become its own “miniature battleground.” Teams are juggling specs, coordinating across departments, and adjusting pricing on the fly resulting to inconsistent margins and glacial response times.
We often see quoting processes that have evolved over time but have never been re-designed for scale or speed. As a result, massive firms are left dealing with long lead times, missed opportunities, and avoidable margin leakage.
These kinds of operational inefficiencies, while subtle, are key focus areas in supply chain management consulting and often surface during private equity due diligence when scalability is under the microscope. The quoting process is often neglected because it doesn’t “feel” broken. But every delayed or underpriced quote is a margin loss in disguise.
So, What’s the Connection?
The common thread across all five cost drains falls between functions. Essentially, they don’t really belong to any one team. As a result, they aren’t tracked in the same way as things like throughput or scrap rates might. And because they aren’t on the radar, they rarely get solved. Every cost drain is urgent. But here’s the thing: the opportunity is not only real, but it is measurable. To take advantage of it, companies need a disciplined, cross-functional approach to uncovering and eliminating these hidden losses. Fortunately, that’s exactly what TBM delivers.
At TBM, we know how to find those gaps that are allowing processes to “fall through the cracks.” More importantly, we are focused, fast, and practical. We step inside the plant, boots on the floor – seeing the reality as it is today, and helping your team refocus on what matters most. Now, let’s look at why this approach is so effective.
TBM always begins with a structured walkthrough. Our teams evaluate how work flows through the site, from material movement and scheduling to visual controls and layout efficiency.
We’re not looking for what’s already being measured. We’re looking for what’s been normalised—outdated setups, unnecessary handling, disconnected systems. These inefficiencies often go unnoticed by teams too close to the process.
TBM sessions bring together operations, engineering, planning, supply chain, and finance leaders alongside the supervisors and frontline staff who are “living” the process. That’s where the breakthrough happens: in the interaction between people, processes and procedures. A recent example: during a single plant tour, the finance director realised that overtime was spiking not because of volume, but because of misaligned shift scheduling. Within weeks, a new staffing model had reduced costs by over €100,000. TBM doesn’t just expose inefficiencies, we create shared understanding across teams.
You don’t need more ideas—you need to know which ones will move the numbers. You need to know which actions will impact EBITDA, cash flow, and productivity, as well as how to prioritise them. The winner is not the one who has the most ideas. The winner is the one who knows how to turn an idea into reality in the next 15 minutes.
Once we’ve gathered observations, we map them directly to financial metrics. Is inventory bloated due to poor scheduling? Are margins slipping due to quote delays? Are you paying a premium for indirect services with zero scrutiny? The fastest wins often come from the things no one thought to question. In many cases, our insights lead directly to focused Kaizen events. These are short, practical improvement sessions that resolve high-impact issues without disrupting operations. Whether it’s improving material flow or reducing changeover time, the focus is on fast, measurable and sustainable wins. Within six to ten weeks, most teams are already seeing visible gains on the floor and in the numbers.
The real breakthrough is that operations and culture evolve hand-in-hand. As beneficial as it is to identify waste, the real value of our work lies in giving leaders and teams a shared understanding of what’s holding them back. We let them know where they can make the biggest difference. In short, it breaks through the internal noise to challenge existing assumptions. As a result, it often reveals that making improvements is less about “doing more” and more about changing your point of view and enlarging your comfort zone.
Most leaders we speak running stable, competent operations with skilled teams. But in today’s environment, “stable” isn’t always enough. Margins are tighter. Complexity is higher. And what once worked, no longer stretches far enough.
Our assessment, our approach, sharpen your focus. It helps you see if you’ve stopped noticing anything. It also gives your team the clarity, confidence, and cross-functional insight to act decisively. If you’re asking, “What are we missing?” this is the right next move.
Private Equity Operational Due Diligence + Value Creation
Private Equity Operational Due Diligence + Value Creation
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