Spin-Off of Global Industrial Machinery Manufacturer Engages aPriori to Leverage the Three “Rs”

The company, which makes smart home products, security solutions, and residential comfort devices and has approximately 15,000 individual contributors worldwide, recognized that its methods to dramatically reduce supply chain costs by millions were not achievable with their current systems and methodologies.

In addition to reducing supply chain costs by tens of millions of dollars, the company also wanted to improve year-over-year profits. Prior to aPriori, the company relied on lowering freight costs and reducing personnel to achieve this goal. The company engaged aPriori because it recognized that this approach was not sustainable and stated it wanted to expand its margins by employing the three “Rs”—Resource, Renegotiate, Redesign.

aPriori’s ability to meet all three “Rs”, made this engagement a perfect fit.

For example, aPriori can help identify and eliminate cost drivers early in the design phase to avoid redesign and late-stage engineering change order (ECO) requirements. Our insights take a design for manufacturability (DFM) approach to identify expensive or impossible-to-manufacture features in 3D CAD models. Additionally, users can easily create different design scenarios for side-by-side comparison. These features enable decision-making so users can eliminate cost drivers while maintaining product quality and performance.

aPriori will work with members of the sourcing group to resource and renegotiate supplier costs on new and existing products and provide insights into the group’s largest cost-reduction opportunities.

Additionally, at the director level, this group manually estimates the cost for five parts per day. Currently, these estimations take nearly an entire day to complete, and each director individually oversees thousands of parts, making it a daunting task to complete them on a timely and accurate basis.

Leveraging the 3D CAD model, aPriori’s costing solutions can calculate costs automatically, precisely, and quickly by:

• Generating fast and detailed cost estimates for multiple parts at the same time (including material, labor, direct and indirect costs)
• Identifying expensive outliers for cost-reduction opportunities
• Providing insight into whether parts will be easy or difficult to manufacture

The sourcing team can also leverage these should-costs to begin fact-based discussions with suppliers and achieve savings on key components. This is especially important when negotiating savings in the current inflationary environment, as rising material costs drive up supplier prices.

The company’s three-year agreement includes aPriori solutions software and Expert Services support. Its commodity management teams will also leverage aPriori insights to evaluate existing supplier agreements and identify additional cost-reduction opportunities in plastics, metals, castings, and forgings.