Our client is a leading international tobacco company with around 73.500 employees, USD 30 b net revenues and products are sold in more than 180 markets.
Business Challenge
To replace cigarettes with reduced risk products, the project aimed at eliminating redundancies, identifying opportunities for simplification, developing solutions to improve equipment user-friendliness, and achieving a 30% cost optimization.
The key challenges were:
- Product cost reduction for the next generation cigarette packer
- Product evolution with 20% new parts and 80% carry-over components (mainly electric/electronic components)
- Target cost vs actual cost estimate results in a gap of 23%
- High level benchmark requested to identify cost drivers compared to benchmark
- Machine Design freeze
Approach
EFESO supported in:
- Enforcement of Design-to-Value methodology, to reduce the gap between customer needs and OEM approach, establishing a new level of cooperation, especially in the early project phase
- The Design-to-Value methodology was deployed with a 360° approach that considers the end-to-end OEM’s Supply Chain
- technical and economic baseline definition
- opportunities generation by scouting new opportunities assessing implementation risk, capex savings, implementation timing, feasibility etc.
- build-up of the to-be DTV Cost model to properly qualify each opportunity by cost item and estimate the cost saving based on the Volume deployment
- implementation plan of the identified opportunities
Main Results
- 26% Average CapEx saving achieved by considering opportunities feasibility, implementation plan and machine configuration per country world-wide
- 30% extra cost reduction was earned for packing, installation and commissioning.
- The client and the OEM established a new way of working, based on a more structured relationship.
- 25% CapEx savings achieved with ~ 110 approved ideas achieved by considering opportunities feasibility, implementation plan and machine configuration per country world-wide.
- Industry benchmarking resulting in practical direction on the competitiveness of technical solutions.
- 30% extra cost reduction was earned for packing, installation and commissioning.
- The client and the OEM established a new way of working, based on a more structured relationship.
- Cost structure analysis of the complete system.
