When losing market share is not an option
A major satellite manufacturer was under pressure to stay competitive. Major technological changes in the industry, combined with stiff competition and the company’s inconsistent approach to R&D investments, put the company at risk of losing out on market share. Already, its gross margins had declined, and its manufacturing and service costs had spiked. Formerly a leader in technological innovations, the company now had customers that were complaining about the company’s technology, delivery schedules, and product designs. The management team had tried to change course—but had failed. Corporate leadership knew it was time for more aggressive action, so they decided to bring in outside help.
Overhauling the company’s cost structure boosts profitability
AlixPartners took a hard look at the company’s cost structure, with the goal of uncovering hidden savings opportunities to give the company some breathing space to innovate once again. Our initial QuickStrike® diagnostic identified significant potential savings from supply chain management changes—from new approaches to design, manufacturing, and testing; and from SG&A.
We then helped the company implement projects aimed at achieving the identified savings targets. The goal was to prioritize and convert savings opportunities into “quick wins.” We helped set up teams, plan and launch projects, and establish systems to efficiently track and report results, so management could spot and swiftly address any risks to the projects. As a result, with our support, the client captured more than $100 million in savings in the first year and had projects underway to capture an additional $100+ million.
In addition, we helped the company create a toolkit for identifying improvement opportunities and tracking performance to ensure that projects met EBIT targets. We also developed a technology roadmap, using feedback from the company’s key customers, to show how the company could regain its technology leadership position and restore its competitiveness.
Finally, we helped the company identify additional improvement ideas that could prove valuable. These included adopting design-for-manufacturing practices to lower costs and delivery times while improving reliability; extending schedule-system improvements to compress program lifecycles; and creating teams to work closely with suppliers (especially those with critical technology, extensive market control, or particularly high costs) to drive ongoing improvements in key performance indicators.
When it really matters
The company’s disciplined approach soon paid big dividends. With more than 400 projects launched, the project was on track to achieve major milestones toward the more than $200 million total anticipated savings.