Growing Computer Products Company Cuts Cost by $1.3 MM
Computer Products Manufacturer
Preparing for Growth
The private equity firm of a newly-acquired computer products manufacturer wanted to improve the company's earnings through a sourcing initiative. On the verge of substantial growth, the company had the opportunity to use advanced sourcing techniques and drive meaningful cost reductions. The ProAction Group helped management execute key sourcing initiatives, turning them into concrete results.
Supplier Selection
Qualification
Metrics & Processes
The ProAction Group completely overhauled the company's Supply Chain. First, we streamlined supplier selection and qualification. Then we designed a structured process for managing suppliers that included the approval of samples and first production runs. We defined supplier quality metrics and conducted audit training. Supplier report cards became commonplace in a company that had not previously held their suppliers accountable. Ultimately, we sought to develop supplier partnerships that would prove valuable in the long term.
We standardized processes in Purchasing, Inventory Management, and Materials Planning. We implemented a Materials Review Board, which kept a constant eye on cost initiatives and inventory turns. We created visual management tools to monitor tasks throughout the sourcing chain.
ProAction also managed the global sourcing process to ensure the quality of materials received before placing additional orders. We oversaw daily operations, such as order fulfillment and inventory replenishment, as the company evolved. Our efforts reduced excess and obsolete inventory.
$1.3 MM increase in EBITDA
As a result of these efforts, material costs decreased by 19%, a $1.3 MM increase in EBITDA.
