Product Cost Reduction

By making the most out of the identified cost reduction opportunities, the client saved $857,635 in 3 years, earned the competitive edge on the market, and gained bargaining power in the supply chain.

About the client

Industry: New energy

Product: Solar lighting products

Company Size: Medium size

Location: United States

Challenges

  • The client had concerns over their products’ cost competitiveness, because their main markets are mainly in Africa and India; 
  • The client did not have engineers and sourcing specialists capable enough for cost reduction technically or commercially; 
  • The main competitor managed to reduce costs for their product lines, earning the competitive edge; 
  • The client had reached out to a few sourcing agencies whose capabilities were limited and couldn’t be the game changer. 

How we helped

  • Built the “should costs” section in the cost breakdown for the client’s products, so our client can use it for price comparison with the then current supplier and future ones; 
  • Reviewed and aligned with the client product specifications, BOM (bill of materials), drawings and forecast; 
  • Sourced and selected qualified, reputable suppliers in a short time. Most of them had worked with Insight Solutions before; 
  • Detail analyzed the quotations from over 3 suppliers with our engineers; supplier; 
  • Provided re-design and re-engineering proposals, including DFM (design for manufacturing) analysis, to the client’s design and engineering team for further evaluation; 
  • Built the tunnel for direct communication between the suppliers and the client; 
  • Developed the cost reduction road map and cost reduction analysis report. 

Results

  • Identified cost reduction opportunities, including:
    • Electronic – purchased from international agencies instead of original manufacturer directly;
    • Plastic – re-engineering and DFM (design for manufacturing) review;
    • Battery – standardized battery specifications and reviewed with multiple sources for netter solutions; 
    • Solar panel – joint design for the most efficient solution and built strategic relationships with key solar panel suppliers;
    • PCB (printed circuit board) – standardized the PCB platform. 
  • Product costs were reduced 11.75%, 5.47%, and 4.1% respectively, which could contribute to saving $857,635 in 3 years; 
  • The client earned the competitive edge on the market; 
  • The client has more bargaining chips in the whole supply chain. 

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