Case Study

Pricing vs. Cost

  • Summary
    • A medium size public OEM custom computer electronics manufacturer was struggling with gaining market share and protecting margins.
    • Customers demanded quarterly cost reductions.
    • Cost information was not updated often enough for reliable pricing decisions.
  • Challenges
    • The project bidding process required that quarterly product cost reductions be guaranteed in advance, risking either loss of award, or loss of margin over production life.
  • Results
    • A process was implemented where project teams including design, purchasing, and manufacturing would review detailed product cost monthly from design concept through end-of-life.
    • Cost reduction opportunities were identified, implemented, and tracked.
    • Favorable variancesvs quarterly targets were produced for the majority of products.
    • Standard costs were updated regularly, maintaining margin performance for all internal organizations.