Tools Manufacturing Client Changes Off-Shore Strategy
The Challenge
The company was facing increasing labor and material costs and had developed a strategic model in which manufacturing capabilities were to be moved overseas. Covid-19 brought new challenges and opportunities beginning in March 2019. The company was experiencing a manufacturing demand increase by 100 percent. Â Due to their inability to meet that demand they were facing the possibility of losing significant shelf-space with retailers. DB&A not only helped the client meet the growing demand and maintain their relationship with retailers, but also reduced the need to move the majority of manufacturing overseas.
About the Client
Our client is the manufacturer of unique tooling for the do-it-yourself woodworker. They are headquartered in a small town in the Midwest and employ over 200 people. They realized their capacity for meeting the rising demand was suboptimal and they were struggling to meet the new volume requirements at the right cost structure to maintain profitable margins. They knew they needed help in quickly implementing change.
DB&A Analysis Financial Proposal
- Projected Fixed Cost: $854,000
- Projected Out of Pocket: $569,000
- Guaranteed Savings: $1,666,000
- Projected Payback: 9 months
Project Summary
- Unable to meet a demand increase of over 100%
- Losing retail shelf space if unable to maintain supply
- Prepare to outsource all manufacturing oversees
- Labor and skills shortage due to Covid pandemic
Actual Financial Results
- Annualized Savings: $2,006,056
- Actual Out of Pocket Dollars: $237,440
- Actual Payback Timeframe: 6 months
Project Results
- 50% increase in throughput & productivity
- Eliminated 2-month backlog in 2 months
- Majority of manufacturing remains domestic.
- Cross-training resolved skills shortage
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