Business Challenge

A manufacturing firm believed that their vendor was overcharging for its parts and as a result, the profit margins of the manufacturing firm were being affected.

Solution

An agreement was established with the vendor to understand the cost structure of the parts. The team built and applied open book costing models to equitably model the cost structure and identify opportunities to reduce the cost structure and share savings.

Business Outcome

This project successfully reduced purchase price and generated $400K in savings. The ROI of the project was 9 months.