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Reduction of Material and Product Costs
Reduction of Material Costs
It is almost always possible to reduce material costs by 5-20% using the following measures:
- A holistic supply strategy
- Optimized processes and organizational structure
- Systematic supplier development
- Frequent benchmarking of existing suppliers
- Globalized sourcing
- Alternative purchasing channels
- A reduced range of product variants
- Constructive adjustments, optimized specifications, and technical component substitution
- Reduced inventories
- Adjustment/improvement of staff qualifications
In Helbling procurement projects, for example, room for improvement in procurement is systematically identified, leading to sustainably lower material costs, from the following perspective:
- Reduction of material costs through a total expense view
- Minimized procurement risks, e.g. through establishment of second sources
- Improved organizational structure and processes in procurement
- Streamlined procurement interfaces and improved integration of procurement processes with other key company processes (e.g. development and sales planning)
- Shortened development time and time to market
- Assessment of the negotiating position with long-standing suppliers through benchmarking against world-class names
Reduction of Product Costs
The complexity and diversity of products is constantly on the rise. In addition, product costs are increased further as a result of poor communication, numerous changes, and shifting deadlines in the individual development phases. The biggest potential for reducing costs lies in the standardization and harmonization of products and processes, wherever possible without sacrificing perceived product diversity. This means that customer-neutral product modules must be customized in line with customers’ needs by combining them with customer-specific modules. Helbling’s practical experience shows that engineering and business expertise often make it possible to reduce product costs by anything from 20% to as much as 50% or even more.
Our skills and experience
Helbling Management Consulting has executed various Reduction of Material and Product Costs mandates in a range of different sectors.
