Case Study: Optimizing Vehicle Manufacturer Product Cost by Streamlining Development
A global, commercial vehicle manufacturer was pursuing a
growth-through-acquisition strategy. The strategy seemed to be
successful, but in the aftermath of its acquisitions, the company was
immersed in complexity and profits were less than anticipated.
Challenge
Production and product development
processes were globally distributed in different markets around the
world, and each business unit had its own product and market demands.
For example, larger markets had stricter exhaust emission standards so
these business units had to build different engines and exhaust
after-treatment systems. As a result, the company had a variety of
product concepts with no clear architecture or defined interfaces.
Approach
To counteract this complexity (and
reduce costs), A.T. Kearney worked with the company to streamline
product development, focusing on a select group of components.
We also helped the company develop guidelines as standards for future
models and established a process that makes it possible to
proactively manage complexity.
Results
Within the first year, the results were
impressive on several levels. Costs in the parts sector, for example,
were reduced by 50 percent. This improvement was accomplished in part
by creating more transparency in the process, and reducing the cost
and quality of materials.
Of equal significance, the company is able to continue avoiding costs
by applying the standardized process that was developed to avoid
complexity before it occurs.
Contact
For more information, contact Götz Klink.
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