Houts

The Challenge

The client has not yet started production of handbags because of profitability issues. The company would operate at a margin near zero which is not sufficient to sustainably compete in the industry. Profitability analyses of operations and potentials for optimization. The goal is making production financially feasible.

The Solutions

Performing a value chain analysis to identify the cost drivers of each activity within the company Identifying and prioritizing the activities with the highest impact potential Developing ideas for cutting costs

The Impact

Results: The biggest cost driver are production costs, more precise labor costs. The material used is difficult to process leading to high labor per unit. As a solution, we have identified alternative materials and thought of relocating production somewhere less expensive.

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