Summary
- Client: Specialized heat exchanger manufacturer
- Challenge: Small, recurring components with high unit costs when manufactured on-demand
- Solution: Annual demand planning, batch manufacturing, and consignment financing
- Results: ~15% cost savings, no capital requirements, flexible withdrawal
Client Overview
Our client manufactures highly specialized heat exchangers for industrial applications.
For their production, they need the same small, specialized components recurring throughout the year. The challenge: although the parts are small, they're needed continuously.
The Challenge
The previous procurement strategy caused several problems:
💰 High Unit Costs
Single-piece or small batch manufacturing led to high costs per unit.
⏱️ Lead Time Issues
Ordering on demand meant long wait times and planning uncertainty.
📦 Delivery Risks
Potential delivery problems could jeopardize entire production.
Our Solution
After discussions with the client, we developed a tailored solution:
Annual Demand Planning
Together with the client, we estimated annual requirements for all recurring components.
Batch Manufacturing
All components are manufactured in one batch at the start of the year – this alone reduced costs by almost 15%.
Consignment Financing
INTEG pre-finances the entire annual demand. The client pays upon withdrawal and settles the balance at year-end.
Results Achieved
The solution delivered multiple benefits to the client:
| Benefit | Impact |
|---|---|
| Cost Reduction | ~15% lower unit costs through batch manufacturing |
| No Capital Required | INTEG pre-finances, payment upon withdrawal |
| On-Site Inventory | Components always available when needed |
| Flexible Withdrawal | Take as needed without minimum quantities |
"Previously, we had to accept high unit costs with every order or tie up capital in inventory. The INTEG solution solved both: lower costs and no tied-up capital. The parts are there when we need them."
— Purchasing Manager, Heat Exchanger Manufacturer
Key Takeaways
This case study demonstrates:
- Leverage economies of scale: Batch manufacturing significantly reduces unit costs.
- Financing solutions provide relief: Working capital doesn't need to be tied up.
- Partnership over supplier: Creative solutions emerge through dialogue and understanding.