COST REDUCTION

LOCATION: Multi-Region

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PROJECT DESCRIPTION

Client hired PRA to manage the diversification of the company’s foreign supplier base to reduce cost and mitigate risk. The client sources 95% of their parts from China. China’s labor costs are steadily rising which runs the risk of cutting into the client’s margins.

CLIENT PROFILE

Revenue:
$2B

Industry:
Building & consumer products

Product Type:
Manufactures a wide array of products for the building industry

PROJECT DETAILS

  1. Target country selection.
  2. Supplier identification.
  3. Supplier evaluations and assessments.
  4. Provide analysis of total supply chain costs including pricing, shipping, & taxes.
  5. Provide information on make vs. buy decisions.
  6. Compare current suppliers to identified potential suppliers for cost savings.
  7. Establish supply chain and deliver products to client.

PRA – GENERATED POTENTIAL ANNUAL SAVINGS

Project Outcome

PRA developed and implemented a supply cost reduction solution where, upon completion, nearly $7 million in potential savings was identified. The client’s annual spend over 6 component groups was $29.3 million. That is roughly 23% of the original annual spend. Furthermore, additional sources were found in four other geographies that represented a portion of those savings. Not only did the client cut costs, they reduced risk by diversifying the supply base away from a dangerous reliance on the Chinese market.