Companies need to gain cost transparency to improve their leverage and competitive advantage. Otherwise companies will not know whether their actions will lead to a quick death or have short-term benefit but with subsequent long-term damage. Companies cannot progress securely without gaining a deep, fact-based understanding of the actual product, tooling and development cost drivers.
From FMCG to automotive, from aerospace to off-highway, PA’s experience of employing these techniques to strengthen client environments has delivered huge financial benefits, initially through
-
‘Stop the bleeding’ – highlight costs bottom-up: identify and prioritise opportunities using a ‘bottom-up’ costing approach for each component, its tooling and system, which clearly documents actual costs across the value chain. This enables a better view on where to focus efforts and is contrary to a ‘top-down’ approach which attempts to squeeze costs down
-
Make it stick – implementation is king: experience shows that once initial cost reduction actions are taken, implementation of longer-term policies to systematically reduce total costs are given a lower priority. However, sustaining the benefits of a bottom-up analysis can lead to sustainable reduction of total cost while ensuring the viability of the supply chain
-
Create a sustainable advantage: A balance between strategic cost advantage for the benefit of the manufacturer and over-dominance of suppliers, keen not to lose that strategic advantage, creates a sustainable network of suppliers serving the industry and contributing research and innovation into future products. This ‘network view’ will ensure flexibility and agility supported by collaboration between manufacturers and suppliers.
PA combines insights and experience for automotive companies such as Fiat and Magna or an off-highway project with Terex. The bottom-up process defines the actual costs, provides a valid and transparent indication of cost reduction potential, and realises the identified savings - focused on project and product costs and based on continuously updated databases.
To discuss your cost-saving potentials, please contact us now.
PRINT
EMAIL
TWITTER
LINKEDIN
FACEBOOK
FEEDS