Case Study

Global Manufacturer - Improving Client's Competitive Position

A global supplier of engineered cooling systems for the power generation industry had recently become a standalone company after an industrial conglomerate divested its power cooling division. Following a long period of market leadership, the company was having difficulty delivering projects on time — and at expected margins — due to internal inefficiencies, shorter lead times, increasingly cost-conscious customers, and growing price competition. To address those issues, Argo designed a project focusing on three different areas: Value Engineering, Engineering Process Optimization, and Manufacturing Operations.

Situation

  • Every product this client sold was Engineered to Order — highly customized to customer specifications and market regulations. Argo was engaged to reduce costs and increase efficiencies to improve the client’s competitive position. We focused on the following:
    • Value Engineering - Reduce component costs, improve system efficiency, and redesign design concepts.
    • Engineering Process - Reduce number of engineering hours and lay the groundwork for process, product and component standardization.
    • Optimization and Manufacturing Operations -Improve overall performance in underperforming production sites focusing on throughput improvement and lead time reduction.

Actions

  • Argo’s approach to Value Engineering centers around our Product Value Management (PVM) process, which looks to reduce costs across product families through sweeping product redesign initiatives. Our goal was to reduce Cost of Goods Sold (COGS) by 5% across three product groups.
  • We sought to consolidate product offerings according to customer application and reduce complexity on the component level, standardizing wherever possible while improving manufacturability and serviceability.
  • To improve the engineering process, Argo identified new global engineering policy and procedures to standardize practices and design concepts across multiple locations.
  • In addition, Argo streamlined the Engineering organization to improve on-time delivery and knowledge sharing.
  • We also worked to cultivate a more innovation-driven culture by defining the company’s future product landscape five to seven years ahead — prioritizing breakthrough products and how to use open innovation platforms to execute projects.
 

Results

  • By evaluating and redesigning existing products for the client’s three major product systems, Argo delivered a proposed total savings of $30 million against the $11 million target, realizing 10-30% total system cost reduction, depending on system.
  • Argo also developed ISO Engineering Policy and Procedures for the client that are expected to cut project-related engineering hours by an estimated 15-20% in Europe and 25-50% in China.
  • On the process side, Argo delivered an average 20% productivity increase and $1 million in savings through manufacturing improvement.
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Argo, Inc is a global operations consulting company dedicated to implementing lasting performance improvements with offices in Chicago (US), Germany and Canada and an active presence in more than 20 countries. Specialties include: Lean Transformation, Six Sigma, Kaizen, Revenue Enhancement, Product & Process Innovation, Sales Effectiveness, Value Pricing, Supply Chain, Strategic Procurement, Network Optimization, Transportation & Logistics, Working Capital, VA/VE, Pre/Post Merger Integration, Training.