Cost-Saving to Sales Localization

Packing Machinery Case Study: From Cost Saving to Localisation of Sales

The client is a market-leading OEM of packaging machinery. Each system comprises thousands of standard and custom-engineered components. Amid sustained increases in material and component costs, the client sought a comprehensive cost-reduction program across its equipment portfolio.

Phase 1 - Cost Savings

Customer Challenge

Find a stable and sustainable source of machine parts that offers us considerable cost savings on our current build, without disrupting any of our processes, whilst ensuring retrofitting parts in existing machinery in the market.

Our Approach

The "Low Hanging Fruit" Approach

Due to the complexity and customization of the machines, we identified a “low hanging fruit” approach to quickly achieve cost savings without sacrificing too much time. we established supplier relocation to low cost manufacturers for the items in each of the groups below.

Standard Products

Standard products bought through distributors, such as bearings, chains, sprockets and power supplies.

Custom Parts

Custom build parts without tooling or molding requirements, together with parts that require high labor involvement.

High Volume Parts

High volume and high value parts that require tooling / mold / fixtures.

Our Expertize

Engineering

Material Synchronization from Imperial to Metric and Back

Material thickness varies from country to country with different tolerance standards. Especially when it comes to the U.S. imperial system to the metric system utilized by the rest of the world. Our engineers worked closely with “the customer” to ensure continuity and retrofit.

Sourcing

Dual-Source Strategy

We establish a dual-source from the beginning until full process control was established and inventory management matured. For IP sensitive parts, we maintained the dual-source approach.

Supply Chain

Process Control and Inventory Management

From the start of the sourcing process to in-production process control and final quality inspection, we were involved in every step of the way to ensure 100% quality delivery. Due to the longer lead time with offshore purchasing, different variations of forecasting had to be established to ensure we never shut the line down!

Results

40% cost savings on standard catalog parts.

50% cost savings on customized components.

Phase 2 - Improve Development Lead Time

Customer Challenge

Optimize product design efficiency to reduce development lead time and further maximize cost savings.

Our Approach

Early stage engagement & Co-Engineering

Analyze

Material properties and functional analysis.

Identify

Identify high-cost features.

Suggest

Base on Form Fit and Function, suggest alternate production processes.

Compare

Compare cost-effectiveness.

Our Expertize

Co-Engineering

Early stage cooperation

Our engineering team worked together with the customer’s design team at an early stage. We helped to optimize the design by suggesting production processes, standard tolerances, material, and manufacturability. We optimized the product design phase and greatly improved the time to market by connecting manufacturing and design engineering from the get-go.

Specialized Sourcing

Special materials and processes

We have experience in developing sources for highly specific alloys or material compositions to support the required functionality.

Special processes we covered in this case: Metal Injection Molding, metal to plastic part conversion, multi-spindle CNC machines.

Results

20% development lead time reduction.

50% cost savings from first production sets.

Phase 3 - Localization Support

Customer Challenge

Set up sales channels in China without huge upfront investment and uncertaintly.

Our Approach

Solution - Embedded Rep Office

Together with our customer we came up with a model where we created an independent and dedicated unit, that was nested in our China organization. This offered a low risk market entry for our customer and only required a small investment. This way we established the following services.

Legal

Human Resources services – Recruiting, training and supporting customer sales team.

HR

Human Resources services – Recruiting, training and supporting customer sales team.

Research

Human Resources services – Recruiting, training and supporting customer sales team.

Events

Human Resources services – Recruiting, training and supporting customer sales team.

Our Expertize

Human Resources

Process Control and Inventory Management

We supported the customer with our many years of experience finding and hiring professional staff in China and building effective and communicative teams.

Legal

Local Legal Knowledge and Experience

We supported our customer with all legal requirements from IP protection to legal liability and options for business registration.

Sales & Marketing

Local Market Knowledge and Network

We executed an initial market research establishing key markets and the most effective channels to develop new business.

Results

We built a team of 9 local staff and technical support within 5 months.

Successfully set up local country corporation.