US Manufacturer Cuts Sourcing Costs by 20% with Smart Strategy

Client Challenges:

The client, a special-purpose machine manufacturing company, was grappling with significant challenges due to the 301 tariff, which increased the cost of sourcing essential heating elements. These components, made from brass, stainless steel, and alumina ceramics, presented the following issues:

High Costs: The tariff had driven up their sourcing costs by 25%, putting pressure on profit margins.

Supply Chain Disruptions: The client’s existing supply chain was inefficient and unreliable, leading to frequent delays, stockouts, and increased operational costs.

Quality Concerns: The complexity of the components required high precision, but the client was experiencing inconsistencies in quality from their current suppliers.

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Solution Provided by Srushty CM

We implemented a comprehensive strategy to overcome these challenges:

  1. Product Re-engineering: We conducted a detailed analysis of the client’s heating element design and identified areas for cost reduction through Design for Manufacturing (DFM). This involved simplifying certain design elements while maintaining the required functionality and quality.
  2. Sourcing Strategy: With our extensive vendor network in India, we sourced high-quality materials at a reduced cost. Our partnerships with specialized suppliers in brass, stainless steel, and alumina ceramics ensured the client received components that met their exact specifications at competitive prices.
  3. Supply Chain Optimization: We restructured the client’s supply chain, introducing more reliable vendors and streamlining logistics processes. This overhaul minimized disruptions, improved inventory management, and reduced operational costs.

Impact:

The strategic interventions led to significant improvements in the client’s operations:

  1. Cost Reduction: The overall sourcing cost was reduced by 20%, helping the client regain profit margins despite the 301 tariff.
  2. Enhanced Supply Chain Efficiency: The restructured supply chain improved reliability, reduced operational costs by 15%, and ensured a steady flow of components, eliminating previous delays and disruptions.
  3. Improved Quality: The re-engineering process and strategic sourcing led to a 15% improvement in the quality of the heating elements, decreasing the rejection rate and increasing product reliability.
  4. Increased Competitiveness: With reduced costs, improved quality, and a more efficient supply chain, the client was able to offer more competitive pricing to their customers, enhancing their market position.
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