Customer Description: Health technology is defined by the World Health Organization as the "application of organized knowledge and skills in the form of devices, medicines, vaccines, procedures, and systems developed to solve a health problem and improve quality of lives.” The customer, a Dutch multinational conglomerate focused on health technology, wanted to benchmark cost of high spend PCBAs (printed circuit board assembly) and cable assemblies. LTTS (L&T Technology Services), with its vast experience and expertise in this domain, was the preferred partner to execute this project.
Business Challenges: LTTS had to help the customer overcome multiple challenges and achieve these objectives:
- Cost saving target of $1.5 million from current spend by identifying cost potential areas in high-cost contributors through spend analysis.
- Identify cost potential areas in high-cost contributors through spend analysis.
- Define the sourcing strategy (by commodity and supplier).
LTTS’ Approach: LTTS approached the problem by understanding the local suppliers and cost analysis of the PCBA and cable assemblies. The step-by-step approach:
- Identified assemblies and parts that are high cost through spend analysis.
- Executed “should costing” for various high spend PCBAs and cable assemblies to identify the price gap and negotiate prices with the current supplier.
- Identified alternate components for high-cost items in PCBA and cable assembling to optimize the material cost.
- Identified potential alternate suppliers in other countries for complex PCBA and cable assemblies.
Business Benefits: The multiple business benefits include:
- Generated cost funnel of $2.15 million through “should costing,” alternate sourcing and parts.
- Prepared cost negotiation strategy for individual suppliers and commodities.
- Developed cost methodology for complex assemblies, like flexible PCBAs and Coax cable assemblies.