To many companies, reducing cost means reducing price. While price is a strong, visible driver for cost, there are other less visible factors. Attributes such as delivery, quality, reliability, and long-term support can have a significant impact on the total cost for a company. For example, what is the cost of a component going obsolete just as a company is ramping its production; or the cost of holding up shipments due to a late component; or the cost of having to rework a month’s worth of shipments due to a defective part? Not only are there direct costs associated with these problems, but there is also the impact of upset customers and lost market share. Also, despite the fact that component costs make up a vast majority of COGS, the cost of transformation, transportation and overhead can often be 10-20% of the product cost and should not be overlooked.
Most companies believe in the concept of “total cost”. In practice, however, they face a number of challenges and rarely have the bandwidth to create comprehensive solutions targeted at reducing total cost. Too often, the process is boiled down to a simple “quote and go” approach, where a few suppliers are quoted and the lowest price supplier is selected. A thorough approach is of great importance particularly with the custom and semi-custom components and subassemblies where even market pricing is hard to establish and switching to a different source is very costly and time consuming. In these cases, there’s typically only one chance to do it right.
Symphony can help your organization optimize its cost structure through a combination of the following:
For examples of what we've accomplished in the area of cost and profitability, please consult the following case studies:
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