Our customer, an international automotive OEM, identified a significant misalignment between target product costs and the current status during the concept phase for a new vehicle. The company’s management team asked us to identify the cause of the product cost discrepancy, and identify counter-measures to reduce product costs.
The project was split into three phases and was run by a Principal, an Associate and a Business Analyst over a six-month period. We always worked as a team, but every team member was responsible for a specific work stream. Our Principal controlled the project, while the Associate and the Business Analyst were responsible for analyses, workshop preparation, moderation and follow-up, as well as the creation of customer presentations and progress reporting.
Phase 1 – Analysis:
To kick off the project, we conducted a detailed review to establish the current situation. This involved analysing how the target cost discrepancy occurred, which components and factors it could be traced back to, and what the causes of the current situation were. On the basis of this analysis, we identified the measures with the biggest cost reduction potential.
Phase 2 – Idea generation:
Together with the customer, we generated cost reduction ideas through interdisciplinary workshops. The participants included leaders of various specialist departments at the customer, additional experts in specific technologies from AVL and our project team. Together we analysed selected solution directions and discussed cost-efficient alternative suggestions. To support this process we also deconstructed competitive products to use as benchmarks. At the end of the idea generation phase, we developed a portfolio of appropriate measures.
Phase 3 – Action evaluation and implementation planning:
We then evaluated each individual measure more precisely in terms of its chances of success. In addition to detailed technical analyses and cost-effectiveness considerations, we also generated implementation plans. Finally, in order to be able to track the progress of the selected measures, we supplied the customer with a project structure featuring defined processes, responsibilities and decision-making committees.
We reported back on progress to the customer’s management team on a weekly basis throughout the course of the project, through standard reporting that the client could continue to use after our involvement had ended. The project management, progress reporting and the coordination of customer teams were also key project elements, in addition to the core technical tasks.
Finally, together with the customer we defined appropriate measures to close the cost gap and further reduce product costs. In addition, we introduced a project structure for the efficient implementation of the measures within the organisation. A result that both we and our customer are very proud of!