From eroding margins to compounding savings on a flagship product line.
The challenge
A Pennsylvania based manufacturer of industrial handling equipment was watching component costs creep up quarter after quarter. Their legacy supplier for precision machined parts had raised prices three times in eighteen months, and margins on their flagship product line had compressed from 34% to 22%. The team did not have the bandwidth to run a full sourcing RFP.
What we did
We ran a diagnostic on the top twelve line items by spend. Identified three where the incumbent was pricing 18 to 30% above market. Qualified four alternative suppliers across two geographies, ran competitive quotes, negotiated terms, and managed the PPAP transition on two of the three parts while keeping the incumbent on the third as a backup.
The result
Landed cost on the flagship line dropped 22% in the first production run after transition. Annualized savings of roughly $780K on those three components alone. Margins recovered. The team redirected the saved engineering hours toward a new product launch.