Raw material increase
Company located in Berlin area manufacturing the telecom products procures the precision stampings from its local supplier. It’s been high speed stampings with high quality surface treatment. Due very long term cooperation there is high trust between these companies. Thanks to that supplier’s every request for price increase due higher raw material costs was always accepted by customer. When we came up to this situation there was another such a request on a table. Supplier refused to cooperate when it turned to Supplier Cost Breakdown. They refused to prove their bases why they ask for price increasing. Since some information about their production process we did have it was enough for us to create this product own Suppler Cost Breakdown. We knew what machines they use, to obtain the raw material prices, estimate the labor costs, machines amortization, SG&A, etc. was the piece of cake for us. Very easy we found out the supplier’s request was not the fair one and had no reasonable bases. Subsequently the supplier in order to avoid its disaster without any word of refuse they withdraw their request. Supplier’s subsequent statement was it was a mistake. We saved more than 50 000 Eur for the company.
