Our client, Ampac, recently merged with Pritzker Private Capital, a large multinational firm, and changed their name to ProAmpac. Shortly after the merger, we received a letter from the head of their global purchasing arm. This letter stated the parent company expected a 3% reduction on all items purchased from all vendors due to their purchasing power. We initially knew we would have our work cut out for use as we try to keep our pricing competitive and fair for all our clients.
The first item they required was a custom form ProAmpac utilizes to track manufactured goods. This item had a very high cost to manufacture with a very low gross profit percentage. We knew it would be difficult to reach their stated goal of a 3% price reduction in its current format so we immediately contacted the customer to schedule a discovery meeting to review the item and its use.
While we immediately saw areas for cost savings, we wanted to confirm the acceptability of those modifications with the client while investigating if there were other specifications we could modify to increase cost reduction. For our discovery meeting, we requested input from all parties along the workflow for this item knowing that would be critical.
During our discover meeting the client walked through the process for this items use. This enabled us to confirm the areas we identified for cost reduction and discovered other areas for modification to help increase cost reduction. We promised the client we would get back to them with pricing and a proof showing our modifications.
We submitted the revised specifications to three factories we knew could, cost effectively, produce the revised form and drew up proofs for the customer’s approval.
Upon receipt of our new costs we determined which would be the most advantageous for our client and found we would be able to save the client over 30% which was well beyond their 3% expectation. This was put together with the proof we had drawn up and presented everything to the client for approval.
The client was very happy we were able to streamline their form, making it easier to use, while reducing their hard cost by more than 30% which was far beyond their expectations. The proof was immediately approved and we only needed to have one piece of stock approved for everything to be complete. It only took a couple of days for the stock to come in for approval which we immediately presented it to the client for approval the day it arrived.
The people at ProAmpac were thrilled they could experience such a large savings on an item they use on a daily basis while making it easier to use. They immediately placed an order for 100,000 pieces with the following comment: “Looks good! Please proceed with a QTY of 100,000. We appreciate your help working on an alternative, more cost effective, solution for us.”