Cost Reduction
LOCATION: MULTI-REGION
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
- Target country selection.
- Supplier identification.
- Supplier evaluations and assessments.
- Provide analysis of total supply chain costs including pricing, shipping, & taxes.
- Provide information on make vs. buy decisions.
- Compare current suppliers to identified potential suppliers for cost savings.
- 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.
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Ada, MI 49301 USA
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