How a truck manufacturer reduced manufacturing cost through Alternate material selection #1

Mohan Santhanam July 31, 2017

Landing page Truck and trailer Flyer.png#1 of blog series on B-WI customer stories

The truck and trailer industry is one of the most dynamic industries, heavily influenced by outside factors like fuel prices. The global market for truck and trailer has witnessed an upswing in growth in 2016 - worldwide sales of 2.9 million trucks which was an increase of 6% over the units sold in 2015. (Source: www.vda.de

While predictions state that the growth rate will be sustained through 2017, manufacturers are still faced with critical challenges like over-capacity, rising operational costs, pricing pressures and regulations. According to the Advanced Industries May 2016 report by McKinsey & Company, competition among truck manufacturers will likely continue to see an increase through 2020.

price-competitiveness-as-engineering-strategy.jpgFor a manufacturer to stay ahead of the competition, they must focus on product innovation, maintaining low product cost, and increasing the turn-around time.

B-WI’s client, a leading manufacturer in the commercial delivery truck industry, had received an order to manufacture a postal truck from a prominent postal system. 

This blog is an account of how B-WI worked with the client to reduce the product and manufacturing costs by 25% while successfully meeting an aggressive 6 month deadline.

The first thing that B-WI did was to set up a global engineering center (GEC), comprised of skilled engineering team members. This GEC team created designs for latching systems, sliding doors, tray systems, lifting systems and a new concept vehicle that had improved ergonomics.

Cost Optimization + Alternate Material Selection

All of the designs were built for optimizing manufacturing costs.  The cost of the material was reduced through alternate material selection. Removing unnecessary aluminum from the inventory for various parts reduced the total procurement cost.

Price_sensitivity.png

The GEC team created a qualification process that enabled the client to choose vendors that provided competitively priced options. B-WI also assisted in improving the manufacturing processes by eliminating waste and consolidating activities across the process flow on the floor.

As alternatives for the material were evaluated and chosen, B-WI was able to reduce the final product’s cost by 20%. The manufacturing cost was also reduced by 25% thanks to the simplified design and the use of standard parts.

B-WI was also able to complete the project ahead of the 6 month deadline, allowing for the client to submit the quote to their customer before the stipulated time frame.

The reduction in the product and manufacturing costs enabled B-WI’s client to firmly establish itself with its customer.  It was a happy win-win situation for all!

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Topics Product Cost Optimization Product Development Solutions Value Engineering