Cost Reduction Sample Projects
Problem: A machinery manufacturer introduced a new product that greatly exceeded manufacturing cost targets, causing the business to lose money.
Solution: A redesign team was convened on an urgent basis to reduce the manufacturing cost without sacrificing quality. Problematic sub-components were identified and redesigned.
Results: In just a few weeks the team reduced the cost by 11%, yielding an annual cash savings of $700,000.
Problem: Competitive pressures had eroded profit
margins on an important but mature product line. The company took an order for two machines, but made an
internal commitment to reduce the cost for the order by at least 10%.
A 10% cost reduction was necessary to keep the product viable for the
Solution: A cross-functional redesign team was
formed and launched. A
“structured” methodology was applied in this team setting to analyze
existing costs and generate ideas for reducing these costs.
A comprehensive list of ideas was generated, but only the “quick
hitters” were selected for implementation due to time constraints of the
Result: The cost of this product was reduced by 12% by applying only a few low-risk ideas that did not require heavy resources. Several other ideas were documented for future action.