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INDUSTRIAL MATERIAL MANUFACTURING
CASE STUDY -
Material Manufacturer Assesses Competitor's Cost Structure
Client Request
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Understand
the cost per ton to manufacture product at select competitor plants
in US and Western Europe
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Find raw material suppliers, pricing, quantity produced, utility
usage/costs, and labor burden
Primary Impact Findings
- Determining
the production yield of existing equipment at each plant and daily
production targets is helpful in assessing actual production
- Generating a
plant organizational chart, # of shifts, shift structure, shift hours,
overtime criteria, shift differential, 401K, pension, insurance co-pay,
insurance benefits, holidays, and vacation days are useful in tallying
labor burden
- Chart should
include plant manager, shift supervisors, maintenance personnel (mechanical
and electrical), purchasing, HR, office personnel, operators, packers,
and shipping/receiving
- Understanding
the raw material suppliers, the utility suppliers, the product formulations,
the delivery distances (rail or truck), and delivery frequency help
determine cost of goods sold
- Information
from existing and former employees, suppliers, transportation carriers,
utilities, government sources, customers and competitors further help
determine cost per ton of goods sold
- Wage structures
and burden vary greatly from US plants to Western European plants
mainly due to socialized insurance, socialized pension, union labor
rates, and vacation time
Primary Impact Recommendation
- Provided cost per ton per factory location and discovered that product mix, type of raw material needed (i.e. silica sand, low iron sand), and country of manufacture caused greatest fluctuations of costs
- Evaluate if material
costs at parity with competition and use labor information in upcoming
labor negotiations
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