Cost reduction via integrated supply chain

 The client

A fortune 500 global medical device company began to question its shrinking profit margins. The supplier is a worldwide leader in the medical device space, supplying its products to more than 100 countries worldwide

The challenge

The supplier was experiencing rising overhead costs that were cutting into profit margins. With 100 percent of its manufacturing executed domestically, management identified red flags associated with tax jurisdiction, which was leaving the client vulnerable to a higher rate of corporate tax. This was a problem most competitors solved years ago, and our client needed help streamlining and diversifying manufacturing efforts.

The solution

Our medical device experts quickly identified an opportunity to close a domestic manufacturing plant and transfer production to a better positioned international facility. Our analysis led to a more integrated supply chain, which reduced the supplier’s cost of goods sold. The supply chain changes and implementations supported the supplier’s global manufacturing strategy. The company was able to reduce domestic risk, which positioned it to meet the requirements of a more beneficial tax jurisdiction.

The benefit

Our medical device team’s knowledge and experience resulted in several benefits for the medical device supplier, including:

• Reduced overhead structure, which lowered the cost of goods sold by 30 percent.
• Significant, corporate tax savings.
• Training & manufacturers’ resources were developed to aid subsequent product & process transfers.
• Development & implementation of transfer plans.
• Completion of back office functions associated with setting up international entities.