How to reduce costs?
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Customized solution (subcontract)

The top advantages of making customized solutions are:

You can have your logo
It is unique and tailor made for you
Difficult to copy or find out who has done the “engine”
Fits to your existing luminaire design
 More cost effective vs standard, if volumes are there.

We can find you a partner for:

    Luminaire housing
  ⇒  PCB
  ⇒  Driver
  ⇒  LED Module
  ⇒  LED Optic, lens or reflector?

Contact us or continue reading our whole article (reading time: 3 minutes)
(Note. We will not provide the end product, just the quote)

Standard solution (cost reduction)

Top reasons you may want to consider checking cost competitiveness of your standard products.

1.   Offered Standard solution of the Luminaire, COB holder, Lens/Optic or Driver does not fit to your budget.

2.   You need to customize solutions for e.g for smaller projects and your current supplier is too expensive or has too high MOQ

3.   You want to find alternative solution provider for specific projects, since there is no forecasting available, but you need fast supply and current supplier could not deliver in time.

4.   Your current supplier has supply issues due to Covid-19

5.   You would like to prepare for plan B supplier, just in case something unexpected happens Murphy’s law)

Would you like to check cost competitiveness of your existing product(s)?

To get things started, we would need understanding of the following:

   Choose 1-5 parts from where we should start
  Current unit price for the parts(s)
  Where do you currently buy the parts
   Current payment terms
  Quantity you are going to need next
   Planned purchasing date (time-schedule).

Normally it takes us 1 week to get you the best offers,
but we will let you know the exact time schedule upon the inquiry.

Result? we will come back to you with:
– New prices and purchasing locations
– Tips for price negotiations
Start now or continue reading our whole article (reading time: 3 minutes)


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Why frequent expense / cost checks are important?

Most of the companies are looking ways to reduce costs right now. Keeping your product(s) cost competitive should be number #1 priority in your list and you should make it as a solid process by minimum on annual basis (and separately for every single larger project).

Lets put this in practice, if you have a business with a 5% operating profit margin and we will take out 10% of your costs, you’ve already tripled the margin to ~15%.

80% of the sales and actual cost opportunity comes from the best 20% of product ideas.

This is one of those blindingly obvious things that people know but ignore and this applies to sales and marketing too. 80% of your customers are interested only 20% of your products, but meanwhile we are spending 80% of our time on the things that does not really matter.

In our head we are clearing the ground by crushing on some mega market trend opportunity, but somehow that rarely(never?) happens or we could be working with the opportunity which really does not bring money to the house, but it’s fun. But what happens when this 20% sales cycle ends?

A strong growth-, continuous improvement- and cost-management culture is key for creating an efficient and effective organization. It’s a mindset, where people won’t stop after achieving targets, they are already working on the next improvement and constantly trying new ways to improve efficiency.

Create culture “how we can make it possible, instead of NO”

Reality is, that often when it comes to cost savings- or continuous improvement discussions there are people in the top positions in HR, marketing, sales, buyer positions etc. having as many reasons why some certain things are not possible as you have different departments. “No, already tried” “need more tools” “not possible” “just no” etc.

Actual core reasons often are laziness, creativity, knowledge or depending on the position:
too much kindness – they just love working with people and are afraid of getting tough, but it’s an art getting tough – in a tough but fair kind of way, It should not lead to conflict it’s when objectives gets clear and people are pushing even harder for better result.

Companies should ban the word “NO” and make people think instead:
how can we make it possible? and make it clear it’s a question about competitive survival. If you don’t cut cost and pass on price reductions, you’ll lose out to competitors who do.

What other expenses / costs I could control easily?

Cost and growth strategies goes actually hand on hand. However, too many companies have been overlooking the cost strategy and has just focused purely on growth strategies (enter to new market, develop new product / niche, differentiation, find new customers etc.) and not looking at the expenses. Some would call it as running in the hamster wheel and it’s good as long as it works, but sometimes it’s good to take some time for thinking about the expenses too.

It’s never too late to add some cost consciousnesses to the staff’s mindset, although it may be little more challenging in the beginning. However, when you start doing it, you can spend the money to more important things for e.g. new product development, technologies or just enjoy higher margin from the beginning of the product’s S-curve (S-curve is related to the product’s life cycle, when product is on top of the “S”-curve it means that the product has begun maturing & sales profits starts declining).

When product reaches top of the S-curve, people typically starts decreasing prices and if you have lots of products you should start considering of developing ABC-analysis.

Make budgeting as a mindset

It’s not only about skipping business class flights and buying priority pass for lounge access (buying priority pass would be actually “green-thing”) and staying in 10 USD hotel rooms in India (or at least sharing the room with someone in more expensive hotels) instead of staying in 5-star Marriott or Shangri-la hotel.

and do the dinners with a client or supplier always need to be at Michelin or 5-star restaurants? or car must be parked in the most expensive area at the entrance of the airport? and generally choosing car instead of public transport).

People who don’t have budget would naturally argue in the beginning, but sooner or later you may need to take these initiatives seriously. Of course, you could make a deal that the staff can stay in more expensive hotels, if they are happy with lower compensation or you can fix higher expenses to incentives.

How we believe, is that you’ll miss the whole adventure in each country and you won’t see how the people are living in the country. If you want to understand the market you must also understand the culture and how the people are living there “when in Rome, do as the Romans do”.

Ok, it’s understandable that some of you may not want adventures anymore. But what’s the point of staying in 5-star hotels? Functional TV is more important than proper internet access? Most of us, anyway spend only night time at the hotel, requiring electricity, internet, shower and bed.
(Yes, Iron too, but you can get it from the lobby – no adventures involved)

Travel expenses are often overlooked by the management, but it is actually in the top 5 expenses in most of the companies.

Fine-tuning it is quick and it’s easy from implementation point of view and yet it can bring you quite decent yearly savings.


NEED HELP?

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