Case Study:  Lean Design - Cost Reduction

Identified, negotiated, and delivered 5-10% cost reduction on in-scope commodities for a global automotive OEM

Situation and Objective

  • A highly complex portfolio of purchased components, combined with a resource constrained purchasing organization had led to significant inflation of purchased part costs
  • A well structured approach and dedicated resources were needed in order to conduct a systematic, fact based analysis and drive cost reductions

Approach

  • Setup and Data Collection
    • Collect and Analyze Commodity and Product Level Data
    • Define Project Scope and Set Aspirational Targets
  • Conduct Analysis
    • Leverage traditional and non-traditional data sources to identify savings opportunities (commercial, design, manufacturing, supply chain, warranty, etc)
    • Develop negotiation approach
  • Execute and Close
    • Engage supply base in fact based negotiations and close

Results and benefits

  • 5-10% average cost savings across in-scope commodities
  • Defined process for ongoing identification and delivery of future reductions
  • List of additional “high potential” cost down initiatives