Sourcing & Procurement

Sourcing & Procurement Development
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A publicly listed, global Engineer-to-Order technology company was suffering from a severe product cost competitiveness challenge compared to it’s main competitors. Majority of the components were sourced and produced for the customer orders according to the engineering calculations and drawings.

A task force was set up and the consultant joined the team to create and implement a new approach: Example products with representative Bill-of-Material were created and engineered, and regular component cost analyses based on should costing were created. Suppliers from Low Cost Countries were identified and quotes for a preferred supplier annual volumes were seeked from those suppliers. Tenders showed 30-50% cost savings compared to the earlier baseline. These new cost levels were locked down with the selected suppliers to the actual sold projects by differential costing – this all was done within 5 months.