Mergon Cuts Customer Costs by 15%

Mergon’s customer, a leading supplier of sanitary products, came to them with a big problem. They were being beaten by a cheaper Asian competitor importing into Europe.

They knew their product quality was better but in order to keep the product in the market, they knew they had to make a 15% reduction in the price of assembly.

These were the steps Mergon took to assist the customer:

1)  The product utilised blow moulding, injection moulding, robotic assembly, finishing of plastic, metal and foiled based components and 100% pressure decay leak testing of the final assembly.

2)  Mergon sales, purchasing, supply chain and logistics management went to visit the customer for a detailed product review.

3)  Mergon collaborated on a detailed sourcing analysis of all the components in the assembly. They discovered that their customer, through their economies of scale, could buy some parts cheaper.

4)  Mergon identified a number of areas where savings could be made without compromising the quality of the product.

5)  The sourcing analysis allowed Mergon to obtain significant savings by validating cheaper, same performance alternatives – the most significant being a 100% recycled HDPE resin for the moulded parts.

6)  Mergon undertook a detailed analysis of their moulding and assembly operations. They implemented a novel cooling technology that could be applied to other products too.

7)  They worked with the customer to validate dimensional and spec changes that allowed Mergon to decrease the moulding and assembly cycle times by 8%.

8)  Mergon changed the way they packed the product on pallets to cube out the transport container – leading to a 6% increase in transport yield.

9)  Rigorous benchmarking allowed Mergon to make significant savings in non-core areas like cardboard and pallets.

10)  All the savings added up meant Mergon beat the 15% target. This allowed the customer to increase their market share by supplying a higher quality than the Asian competitior at a similar price.

The analysis built a deep relationship across multiple departments between Mergon and their customer, and Mergon ultimately increased sales on the product.

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