Combating Rocketing Costs

Situation

The boom in global consumption of resin was causing prices of raw materials to spiral upwards. This consumer products company was spending 70% of all manufacturing costs on raw materials. Rising resin cost had cut into already thin margins, and every effort had been made to obtain price concessions from suppliers. A profitable business was in danger of going into the red.

Complications

To further exacerbate the problem, the market they operated in had excess conversion capacity and it was proving extremely difficult to pass any additional cost on to the customer. The operations team felt that they were in an untenable situation that was completely out of their control. A no can do attitude had taken hold and was preventing the team from proactively seeking solutions.

Results

By getting the team to focus on the things they could control, Stroud was able to help drive a 30% reduction in materials waste across the division. This waste reduction led to a dramatic impact on the bottom line and the company was able to improve its margins despite rising materials cost. Stroud has since helped this company implement an enduring process for driving significant improvements on a day to day basis.