Industry: Medical Device Manufacturer
Develop organizational flexibility – Grow with resilience
The problem:
A medical device manufacturer was quoting excessive lead times to customers due to production capacity overload. This resulted in customer dissatisfaction and lost orders to competition. Sales of the company were dropping, and management saw the need to quickly turn this trend around.
CHALLENGES
- Lack of visibility of demand through the supply chain; long term agreements (LTA) not translated through the supply chain or communicated to suppliers.
- Sales teams incentivized on immediate numbers without a focus on longer-term downstream effects.
- Current customers threatened to not renew contracts if price reduction requests were not met.
SOLUTION
- Implementation of a Sales and Operations planning process in the first 30 days.
- Roll out of cost reduction KPIs (key performance indicators) across the supply chain, including those based on key suppliers and partners.
- Development of a consistent pricing strategy using data from supply chain, engineering and sales management.
- Deployment of an automation and digitization strategy to reduce operating costs across critical workflows.
Results obtained:
With the new process and automation in place, manufacturing costs were reduced by 23% which resulted in a profit increase of 14% in one year. The client was able to compete for high volume bids with attractive pricing.