Manufacturing : Redesign to cost

Product standardization by modular design
Case study
07/17/2015

Context and challenges

The customer is a market-leading manufacturer of electric equipment, whose competitive performance is seriously threatened by the challenges facing suppliers in low-cost countries.

The technology is mature and the clientele is very conservative. Changes of supplier and renegotiations have already led to a breaking point.

Approach and methodology

Argon Consulting proposed a strategy that combines a design-to-cost approach with the outsourcing of a large part of production to low-cost countries.

Since the materials and components are already sourced from the cheapest suppliers, the only means of remaining productive is to cut production costs. Argon Consulting worked with the Marketing and R&D managers on a new design that allows for the production of modular subassemblies in low-cost countries that can be assembled according to the customer’s specific needs, in their own country and according to their deadlines.

Results

This project increased the customer’s overall profitability by 5 points, allowing them to protect their market share, without deteriorating their margin.