A $4B publically traded medical device supplier reduces costs by over five percent.
A multi-billion dollar medical device company sought a new strategy for the upcoming cost reduction storm.
The supplier’s global operations lead was handed a challenge from the CEO: Get ready for upcoming mandated cost reduction requirements by reducing costs by 5 percent. In addition, the organization wanted to improve its operations capacity to meet its projected growth.
Our cost reduction consultants assessed the client’s manufacturing facilities, identifying opportunities to reduce costs and enhance efficiency while maintaining superior product quality. We worked closely with senior management to determine cost reduction solutions that fit the specific needs of the organization. The team evaluated all aspects of operations, manufacturing strategies, and product lifecycles to pinpoint every cost-saving opportunity. Multiple implementation projects were initiated to rapidly achieve key savings opportunities.
Our recommendations have resulted in several benefits for the medical device supplier, including:
- A comprehensive assessment of each facility, which identified over $175 million in cumulative savings over five years.
- Actual cost reductions of over seven percent, exceeding the CEO’s original goal.
Notable projects included:
- Identification of equipment consolidation opportunities. The manufacturer believed it was operating at an average of 80+ percent utilization in multiple plants, however, we determined that actual utilization was below 45 percent, leading to an opportunity for further cost reductions through reassignment and avoidance of new capital.
- Improved machining throughput by integrating new technologies and NC program changes, resulting in $5 million in recurring annual savings.
- Increased plastic molding cavitation with $1.25 million in recurring annual savings.
- Increased throughput using optimized lot sizing and multiple scrap reductions with $1 million in recurring annual savings.