More for Less: Strategic Cost Reduction
Updated: Dec 30, 2018
An effective solution for established product companies to increase competitiveness by improving quality and reducing cost.
Client: A leading mobile accessory brand (manufacturer)
Service: Cost reduction
The client was able to cut the COGS by over 50%.
The client has been building the same series of product for 10 years. While sales ramp up fast in the past few years, the profit went down notably due to the significantly increased marketing costs. After investigating clients’ supply chain, we proposed the plan and reduce their cost from below aspects:
Based on client’s specifications, negotiate with existing contracted manufacturing factories and source new suppliers to reduce BOM cost by 55%
Switch client’s standard shipping from air to ocean; introduce new freight forwarders to bid on the business and reduce shipping cost by 70%
Optimize client’s product development process to reduce lead time by 42% to make room for ocean shipping
Improve shipment consolidation to reduce shipping cost
With all above processes, in one year, the client was able to cut the COGS by over 50%.